Preamble

The House met at Half past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — ROYAL AIR FORCE

Levies, Aden (Duties)

Mr. Skeffington: asked the Secretary of State for Air what is the present strength of the levies in Aden; what duties they perform; and whether he is satisfied that they fulfil their purpose.

The Secretary of State for Air (Mr. Philip Noel-Baker): The Aden levies assist in the local defence of the Protectorate, and in guarding the stations of the R.A.F. I am glad to assure my hon. Friend that they carry out these duties to the general satisfaction of all concerned. It would not be in accordance with present practice to disclose their strength.

Mr. Skeffington: Is my right hon. Friend aware that in a recent disturbance in Aden these levies were not used, and that it seems likely that Arab levies are not to be used against Arabs? Is he further aware that there is a rumour that the number of levies is to be further increased?

Mr. Noel-Baker: I have not had any of the information of which my hon. Friend speaks, but if he will send it to me I will have it considered. My information is that up to the present these levies have done a good job.

Aircraftman's Death (Departmental Error)

Sir Waldron Smithers: asked the Secretary of State for Air if he has now

considered the details which have been sent to him concerning the treatment meted out to L.A.C. Streatfield, deceased; and if he will make a statement.

Mr. P. Noel-Baker: Yes, Sir. I am grateful to the hon. Member for bringing the sad case of L.A.C. Streatfield to my attention, and I should like to express my deep sympathy with his parents in the loss which they have sustained. The facts are as follow: L.A.C. Streatfield arrived from India on 7th of May. On 8th of May he was sent on a month's disembarkation leave. Ten days later he fell ill and his father called in a local doctor. On 21st of May, he was admitted to one of the civil hospitals of the Ministry of Health's Emergency Medical Service, where he died that night. The cause of death was malaria, from which L.A.C. Streatfield had previously suffered. Letters of sympathy were sent to the parents by Streatfield's commanding officer, and by the Air Council but, owing to a mistake in the Record Office, other units concerned were not notified of his death. In consequence, Mr. and Mrs. Streatfield subsequently received a notice of extension of leave, and a posting notice, and the civil police called to inquire why he had not rejoined his unit. Disciplinary action will be taken if individual responsibility for the error can be traced, and I will do everything I can to ensure that no such thing shall happen again.

Sir W. Smithers: While thanking the right hon. Gentleman for his full answer, may I ask him whether, in view of the inhuman treatment of the family, it is possible for him to write a personal apology to the parents?

Mr. Noel-Baker: I will certainly do as the hon. Member has suggested. These accidents in a big administration must happen, but this is the first of its kind there has been in the Air Force.

Married Quarters, Syerston

Mr. Sidney Shephard: asked the Secretary of State for Air why none of the 60 married quarters being built at the R.A.F. station, Syerston, are to be allotted to officers.

Mr. P. Noel-Baker: All the married quarters now being built at Syerston are of the type designed for airmen, and they are all required for airmen and their wives and families. Several proposals


have been and are being considered for the provision of officers' married quarters, but I regret that so far the difficulties have not been overcome.

Mr. Shephard: Is the right hon. Gentleman aware that this aerodrome is in a very sparsely populated rural area, and that married officers have the greatest difficulty in finding accommodation for their wives? Is it the policy of the Air Ministry that married quarters should be built only for other ranks?

Mr. Noel-Baker: Not at all. In many places we have managed to arrange for married quarters for officers. There are great difficulties. But I am well aware of the hardship at Syerston, and I hope that some arrangement can be made.

Free Travel Warrants

Mr. Wyatt: asked the Secretary of State for Air why the number of free travel vouchers has been reduced from four a year to three.

Mr. P. Noel-Baker: During the war, men and women in the Services were given four free warrants a year when they went on leave. When the pay of the Services was improved, it was felt that the heavy cost of this wartime concession could no longer be justified, and in 1946 the number of free warrants was reduced from four to three. Pending a final decision, instructions have been given that during the present year only two free warrants should be issued.

Mr. Wyatt: Does not my right hon. Friend agree that if the Government insist on retaining Forces far larger than we can afford they should at least treat them decently, and not make petty inroads into this wartime concession? Will he take steps to see that the policy is reversed?

Mr. Noel-Baker: I would remind my hon. Friend that conditions now are not the same as they were when this wartime concession was introduced, and that the cost is very heavy. One extra warrant given to the Royal Air Force costs the nation£500,000.

Mr. Driberg: Would my right hon. Friend bear in mind that this cut is most inequitable as between man and man, since the amount spent on going home depends on where the man's home happens to be?

Mr. Noel-Baker: Yes, Sir, but it also depends on the posting. Broadly, I think

it evens itself out although, of course, there must be some inequalities.

Squadron-Leader Fleming: In view of the answer which the right hon. Gentleman has given, can he say whether reduced fare passes are still being issued?

Mr. Noel-Baker: I should like notice of that question.

Oral Answers to Questions — CIVIL AVIATION

B.O.A.C. Atlantic Services (Base)

Mr. Geoffrey Cooper: asked the Parliamentary Secretary to the Ministry of Civil Aviation, in view of the operational facilities available in this country for U.S. aircraft, which are equal to, if not greater than, those in European countries already operating such aircraft successfully, if he will now consider issuing a direction to B.O.A.C., in accordance with his statutory powers and in the national interest and to save dollars, to transfer its operational base for the Atlantic services from Montreal to England.

The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. Lindgren): No, Sir. The desirability of transferring this base to the United Kingdom at the earliest possible date is, however, fully appreciated, and I can assure the hon. Member that this question is receiving very close attention, in consultation with the corporation.

Mr. Cooper: Does the Parliamentary Secretary realise that R.A.F. "C" type hangars are perfectly capable of accommodating Constellation aircraft? Can there not be co-operation between the Parliamentary Secretary and the Secretary of State for Air, to ensure that a suitable aerodrome is made available immediately? Further, is the Parliamentary Secretary aware that the real cause of the present disinclination of B.O.A.C. to move the base to England is that senior staff whose opinions are asked do not wish to give up their luxurious living in Montreal at the present time?

Mr. Lindgren: Perhaps I might deal with the second part of the supplementary question first. It contains an unfair imputation upon the staff concerned, and so far as I have been able to ascertain there is no evidence to support it. So far as the first part of the supplementary question is concerned, there is a very close


co-operation between the Secretary of State for Air and my noble Friend. The hon. Member was good enough to suggest one aerodrome where these operations might take place. Consultations took place and the Air Force were prepared to make arrangements. It is equally true that if a large number of workmen are concerned they must have housing accommodation. In the case of the Kemble aerodrome, there was no housing accommodation for the workmen.

Scottish Advisory Council

Mr. Rankin: asked the Parliamentary Secretary to the Ministry of Civil Aviation who is the representative of the Scottish Members of Parliament on the Scottish Advisory Council on Civil Aviation.

Mr. Lindgren: Scottish Members of Parliament, as such, are not represented on this council.

Viking and Dakota Aircraft (OperatingCosts)

Mr. William Shepherd: asked the Parliamentary Secretary to the Ministry of Civil Aviation the operating cost of the Viking aircraft and that of the Dakota, shown so as to draw a proper comparison, having regard to their different carrying capacities.

Mr. Lindgren: The cost of operating either type of aircraft depends upon the routes concerned and the operating conditions. The Viking has only been in regular operation for a comparatively short period, but experience already shows that the Viking carrying 24 passengers does not cost more per aircraft mile to operate than a Dakota carrying 18 passengers over a similar range.

Mr. Shepherd: Are we to assume from that answer that the Viking is not a very expensive aircraft to operate, and that the allegation made by an American representative a short time ago is without foundation?

Mr. Lindgren: I am not quite certain to which American statement the hon. Member refers. It is true, and it is no good hiding the fact, that the Viking is an adaptation of a wartime machine which was not altogether suitable for transport purposes. It is more costly to operate than one would desire. It is an interim type of aircraft.

ARGENTINA (PASSPORTS, RETENTION)

Mr. Turton: asked the Secretary of State for Foreign Affairs whether he is aware that the Argentine immigration authorities take British passports away from British subjects entering employment in the Argentine Republic and retain these passports for 12 months; and what representations he proposes to make to the Argentine Government to prevent the continuance of this irregularity.

The Under-Secretary of State for Foreign Affairs (Mr. Mayhew): I am informed that the Argentine authorities retain the passports of all persons who enter Argentina with tourist visas and do not return them until the tourists leave the country again. Persons who enter as tourists, but who decide to remain, can only regain their passports if they can produce a permanent residence permit, which, I understand, they can only acquire after spending twelve months in Argentina. His Majesty's Government regard as open to grave objection the practice of retaining the passports of British subjects, and representations have been made to the Argentine Government.

Mr. Turton: Can the hon. Gentleman say when those representations were made? Is he aware that the practice has gone on for some considerable time and that British subjects are being deprived of their passports for the whole 12 months?

Mr. Mayhew: Without notice, I cannot give the date of the representation. We are not satisfied with the position and we shall continue doing what we can.

Wing-Commander Hulbert: If British subjects have been deprived of their passports, are they receiving any assistance during that time from the Embassy?

Mr. Mayhew: I should like notice of that question.

Oral Answers to Questions — GERMANY

Agrarian Reform (Draft Ordinance)

Mr. Vane: asked the Secretary of State for Foreign Affairs how many farmers will be partially expropriated according to the draft ordinance for agrarian reform circulated as an appendix to C.C.G. letter ZAC/ D(47)37 of 4th June, 1947; which German authorities or


interests have been consulted; and whether any objections have been lodged against the adverse effect on food and timber production which it will cause.

Mr. Mayhew: It is estimated that between 2,000 and 3,000 farmers in the British zone would be expropriated on the basis of the provision of the draft ordinance referred to in the question. The Zonal Advisory Council in the British zone has been consulted. The reply to the last part of the Question is that an adverse effect is not anticipated and no objections have been received.

Mr. Vane: Does the hon. Gentleman really expect the House to believe that smallholdings on this poor land will produce the same result as on bigger farms? Also, has he considered how to maintain timber production and supplies if the forestry areas are cut down in this drastic manner?

Mr. Mayhew: Yes, Sir, certainly these things have been very carefully considered, but there are other factors, such as more intensive cultivation. Taking the thing as a whole, we do not expect a fall in production.

Mr. Vane: What agriculturists have been consulted apart from the Zonal Advisory Council?

Mr. Mayhew: When the matter was first referred to the Zonal Advisory Council, the Council contained representatives of farmers, trade unionists and so on. The present Zonal Advisory Council consists of representatives of the political parties but they are free, and are indeed urged, to consult such outside interests.

Mr. Pickthorn: asked the Secretary of State for Foreign Affairs whether he will make available to Members copies of the Draft Ordinance of Agrarian Reform for the British zone of Germany.

Mr. Mayhew: Yes, Sir. I have arranged for copies to be placed in the Library.

Mr. Pickthorn: Are we to be told on which date the Draft became available and whether the making of it available to Members of Parliament was already decided, or was it not until the Question was put on the Paper?

Mr. Mayhew: I should need notice of that question.

Russian Child (Application)

Mr. Piratin: asked the Secretary of State for Foreign Affairs what reply he has made to the request from the Soviet Foreign Ministry for the release of seven-year-old Victor Mukhamedov whose address is c/o Welfare Office Kindergarten, Klingenberg, Germany, and his return to his mother Mme. Maria Mukhamedova; and what steps are being taken to fulfil this request.

Mr. Mayhew: This matter is already being investigated, and a reply will be sent as soon as a report is received from the British authorities in Germany.

Mr. Piratin: While thanking the Minister for that answer, may I ask whether he would consider investigating further charges that a number of other Soviet children are concerned in this matter? Would he investigate this matter at the same time?

Mr. Mayhew: I will certainly investigate it, if the hon. Member will send me information. In the case we are investigating now, may I say that the matter was not drawn to my attention by the Soviet authorities. We acted on our own initiative, as the result of Press reports in Germany.

POLAND (ARRESTS)

Mr. Austin: asked the Secretary of State for Foreign Affairs why he recently sent a letter of protest to the Polish Government regarding certain arrests; and if he will make a statement.

Mr. Mayhew: My right hon. Friend has not sent any recent note to the Polish Government protesting against arrests.

Mr. Austin: On what date was the protest made?

Mr. Mayhew: Possibly my hon. Friend has misread reports in the Press to the effect that we have asked our Embassy in Warsaw for information on this question. That is not the same thing as a protest to the Government.

Professor Savory: Has the hon. Gentleman any information with regard to Mr. Puzak, Secretary-General of the Polish


Socialist Party, and one of the most respected political leaders in Poland, and to five other Socialists whose names I shall give him?

Mr. Mayhew: Perhaps the hon. Gentleman would put down a Question on the subject.

Mr. H. Hynd: With regard to the last supplementary question about the Polish Socialists, can my hon. Friend say why he has not already dealt with the matter?

Mr. Mayhew: We asked for information. I am well aware that these reports have caused anxiety among my hon. Friends. My right hon. Friend has made it clear on other occasions that he deplores political arrests.

Mr. Austin: Would the Foreign Office consider exercising discretion and sending a similar letter to Greece in regard to the recent arrests?

JEWISH REFUGEES' CAMP, ADEN

Mr. Skeffington: asked the Secretary of State for the Colonies what is the cost of the camp established for Jewish refugees in Aden and by whom it is borne; how many people live in the camp; and what steps have been taken to persuade them to return to the Yemen.

The Secretary of State for the Colonies (Mr. Creech Jones): The cost of£1,700 a month is borne by the Jewish Organisation which maintains and administers the camp. Certain services, such as water, are provided free by the Government of Aden. There are about 1,700 people in the camp. The King of the Yemen has undertaken to restore to Yemeni Jews returning from Aden, their pre-existing status and rights, and arrangements were made to provide free transport and subsistence money on the journey for those willing to return. One thousand, one hundred have returned to the Yemen under this scheme since its inception in the latter part of 1946, and the movement continues.

JAMAICA (UNEMPLOYMENT)

Mr. Turton: asked the Secretary of State for the Colonies what is the present number of unemployed persons in

Jamaica; and what steps are being taken to relieve unemployment in this Colony.

Mr. Creech Jones: With regard to the first part of this Question, I would refer the hon. Member to the reply I gave to my hon. Friend the Member for South-East St. Pancras (Dr. Jeger), on 5th March this year. No fresh information has since been received from Jamaica, but I am again consulting the Governor, and will let him know. With regard to the second part of the Question. I would refer to my reply to a similar Question by my hon. Friend the Member for East Harrow (Mr. Skinnard) on 18th June.

Mr. Turton: Has nothing been done since 5th March to relieve unemployment, and to attract men to the cement industry in Jamaica in view of the large number of young men who are discontented and unemployed?

Mr. Creech Jones: That is a completely unwarranted assumption from my reply. If the hon. Member will turn to the reply I gave on 18th June to the hon. Member for East Harrow he will see that the Government of Jamaica are fully alive to the gravity of the problem in Jamaica.

Mr. Driberg: In this connection will my right hon. Friend look at the scheme for the suggested re-settlement of Jamaican ex-Service men drawn up by a Jamaican Royal Air Force officer, which has been sent to him?

Mr. Creech Jones: Yes, and there is a scheme already in operation for ex-Service men. In the reply to which I referred I gave information in regard to that matter.

PALESTINE (BUBONIC PLAGUE)

Sir W. Smithers: asked the Secretary of State for the Colonies, if he will give the latest information about the outbreak of bubonic plague in Palestine.

Mr. Creech Jones: From the start of this outbreak on 26th June, up to 15th July, 15 cases were treated, only one of which was fatal. Heavy and widespread infection amongst the rat population is reported, but energetic measures have been taken, and no new cases have been notified since 8th July.

Oral Answers to Questions — TOBAGO

Land Settlement

Mr. H. Hynd: asked the Secretary of State for the Colonies, how much land suitable for cultivation in Tobago is at present uncultivated; and what plans have been made by the Government of Trinidad and Tobago to assist the settlement of landless peasants on smallholdings in Tobago.

Mr. Creech Jones: The information asked for in the first part of the Question cannot be furnished until the results of the census of 1946 have been compiled. I will write to my hon. Friend as soon as the figures are available. As regards the second part of the Question, I would refer to my reply to the Question on this subject asked today by my hon. Friend, the Member for Heston and Isleworth (Mr. W. R. Williams).

Mr. W. R. Williams: asked the Secretary of State for the Colonies, how many estates have been put up for sale in Tobago within the last five years; whether the local government has taken over any land for distribution to landless peasants with assisted purchase; and whether there are any plans for such action in the future.

Mr. Creech Jones: I regret that the answer to the first part of this Question could not be ascertained without research into a large number of deeds. The Colonial Government have recently acquired an estate of 600 acres in Tobago with the object of establishing an agricultural experiment and demonstration centre of some 80 acres, and creating a land settlement for peasantry. There are no further plans at present for the acquisition of land for settlement.

Mr. Williams: Will my right hon. Friend satisfy himself that the rentals proposed in these cases are such as to make the development of the smallholdings a practicable proposition for peasants with small means?

Mr. Creech Jones: I know that to be the desire of the Trinidad Government, but I will so inform them.

Steamship Service

Mr. H. Hynd: asked the Secretary of State for the Colonies whether he is satisfied that the Government steamship

service serving the island of Tobago is efficient and that its fares are as low as possible.

Mr. Creech Jones: yes, Sir. I am aware that the two steamers in use are small in relation to the volume of traffic, but it has not yet been found possible to replace them by a larger ship, owing to the high level of shipbuilding costs.

Medical Service

Mr. H. Hynd: asked the Secretary of State for the Colonies whether he is satisfied that there are sufficient doctors in Tobago to attend to the needs of the population; what public health service is provided by the Government; and whether he is aware that the cost of medical attention is almost prohibitive for the poor.

Mr. Creech Jones: As the answer is rather long, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

Following is the reply:

There are four Government medical officers, three of whom are full time officers. The Russell Committee recommended in 1944 that in addition to the three medical officers then employed, there should be a full-time qualified county medical officer of health and a house surgeon for the principal hospital. Since then an additional part-time medical officer has been appointed, and I am making inquiries whether further steps have been taken. The nursing staff numbers nine, and includes a matron and three health visitors; there are five sanitary inspectors. The Colonial Government provide one 60-bedded hospital, which can be expanded to 70 beds, and 12 health offices and dispensaries. An intensive campaign against yaws, hookworm and malaria is being carried out at the present time.

As regards the last part of my hon. Friend's Question, paupers and old age pensioners receive free medical treatment. Persons in possession of a poverty certificate from the local administration, or from the public assistance authorities, pay 15. the receipt for which entitles them to medical treatment for a fortnight.

Public Works Department (Employees)

Mr. W. R. Williams: asked the Secretary of State for the Colonies what


pension provision is made for manual workers employed by the public works department in Tobago; whether these workers obtain regular all-the-year-round employment; and how wages paid by the public works department compare with those for similar work paid by private employers.

Mr. Creech Jones: Manual workers employed by the public works department in Tobago, whose posts are scheduled under the Provident Fund Ordinance, are entitled on retirement to provident fund benefits. The remainder are eligible for gratuities under the regulations applicable to all daily paid employees of Government who do not contribute to the provident fund. A number of these workers are regularly employed, the remainder are employed on a casual basis as and when work is available. There are no private employers of labour in Tobago engaged on large scale building and roadmaking projects, such as are undertaken by the public works department, and a comparison with private employment is, therefore, not possible.

Mr. Williams: Will my right hon. Friend take further steps to satisfy him-self that the guaranteed week is granted in this case as far as possible in order that subsequent claims for gratuity and old age pensions shall not be invalidated because of this non-constant work?

Mr. Creech Jones: I will look into that point, but this island, and other islands in that part of the world, suffer from under-employment and the solution is very difficult.

Mr. Wilson Harris: Will the right hon. Gentleman say what it is that brings Tobago into the news so extensively and so suddenly.

Oral Answers to Questions — AFRICAN COLONIES

Strike, Nigeria (Disorder)

Mr. Gallacher: asked the Secretary of State for the Colonies whether he will make a statement on the shooting of strikers by the police at Buruta, Nigeria; what was the cause of the strike and the reason for police opening fire; and what casualties there were among the strikers.

Mr. Skinnard: asked the Secretary of State for the Colonies if he has any statement to make on the strike of United

Africa Company's workers at Buruta, Nigeria, and on the disorders which resulted in many strikers being wounded in a clash with the police.

Mr. Creech Jones: A strike of labourers employed by the United Africa Company at Burutu started on 14th June following a wages dispute. On 21st June a large crowd formed and adopted a menacing attitude. Four employees of the company were set upon, and severely beaten. After the crowd had refused to disperse, in spite of repeated warnings, an unsucessful attempt was made to break it up without the use of firearms, and the order to fire was only given after the police had been attacked with large stones and other missiles. Only two rounds were fired, as a result of which two men were wounded in the leg. The wages dispute is being inquired into by a representative of the Nigerian Labour Department.

Mr. Gallacher: Will the Minister take steps to put a stop to any such brutal treatment of the workers? Is the Minister aware that the hon. Member for Dumbarton Burghs (Mr. Kirkwood) and I were once accused of stone throwing when it was a deliberate lie? I appeal to the Minister to make certain that never again will firearms be used on workers who are striking for decent conditions. I think it is shameful.

Mr. Creech Jones: If my hon. Friend would acquaint himself with the facts, I think he would be satisfied that this is not an instance of brutal attacks on workers. Rather it was the response, after long provocation by workers, of the forces of police on the spot. Immediately the facts were brought to my notice I caused an inquiry to be made, and had the fullest reports from Nigeria. I must exonerate completely those responsible for ordering it. It was provocation on the workers' side that led to it.

Mr. Carmichael: Will the right hon. Gentleman state whether in making this impartial inquiry he did not know full well that the answer he has given about strikers provoking the trouble has been a familiar story in this country for the last half-century?

Mr. Creech Jones: I am familiar with large numbers of industrial disputes in the Colonies, and naturally because of my own suspicion, I should inquire most


carefully as to the causes of trouble of this kind. I made the fullest inquiries possible, and I am satisfied that it was provocation on the workers side which caused this trouble.

Mr. Lipson: Would it not be better to use tear gas in such strikes?

Mr. Creech Jones: I many cases tear gas is employed.

Mr. Gallacher: Will the Minister appoint from this House a special inquiry into this question? Is he aware that I had my head bashed in two or three places by a policeman's baton, and then got three months for assaulting the police?

Mr. Leslie Hale: How many statements did my right hon. Friend obtain from the strikers, and how much of the information came from the other side in his inquiry?

Mr. Creech Jones: I have the completest confidence in the Governor, and I have taken my reports from the Government of Nigeria, and from various sources which were open to me. I am completely satisfied with regard to the facts.

Mr. Hale: Perhaps the right hon. Gentleman did not understand the question I put, because conversation was going on around him. I asked how many statements were received from the strikers?

Mr. Creech Jones: I am unable to answer that question without notice.

Uganda (Taxation)

Mr. Leslie Hale: asked the Secretary of State for the Colonies what are the existing rates of taxation on Europeans in Uganda.

Mr. Creech Jones: As the answer includes a number of figures, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

Following is the answer:

There are two forms of direct taxation on Europeans in Uganda; (1) A nonnative poll tax, which is levied at the rate of£3 per annum on incomes which do not exceed£200 per annum, and at the rate of£5 per annum on incomes exceeding£200 per annum. Women with incomes of under£150 per annum are

exempt from payment of the tax, as are persons under the age of 18 years. (2) An income tax, additional to the nonnative poll tax, which is levied at the following rates:
Where the chargeable income does not exceed£250–2s. for every pound.
Where the chargeable income exceeds£250–2s. with the addition of one-eighth of a cent. for every pound of the chargeable income in excess of£250 up to a maximum rate of 5s. for every pound thereof.
Where the income exceeds£3,000—An additional tax (Surtax) at the rate of 4s. with the addition of one-twentieth of a cent. for every pound of the total income in excess of£3,000 up to a maximum rate of shs. 7/50 for every pound in excess of£3,000 of the total income.

In calculating the chargeable income the following personal deductions are allowed:— £350 for a man,£150 for wife,£75 for first child and£60 in respect of each subsequent child. There are also the usual deductions for dependants (other than children) life insurance and superannuation.

Mr. Hale: asked the Secretary of State for the Colonies what is the estimated income of a peasant in Uganda farming one standard plot of land; and what is the amount of taxation to which he is subjected.

Mr. Creech Jones: I regret that the information sought in the first part of the Question is not available in the Colonial Office. I am asking the Governor of Uganda to supply it and will write to my hon. Friend when it is received. In regard to the second part of the Question, the taxes for which the African peasant in Uganda is liable (including local taxation) vary according to District, area and tribe from 12s. to 47s. per annum.

Mr. Hale: Is my right hon. Friend aware that the information I am getting is that the poll tax, both of the Uganda main Government and the Kabaka's Government, amounts to 25s. per head, and that other levies amount to 18s. per head, making£2 3s., and that the average income of a peasant from a plot of land is£4 a year?

Mr. Creech Jones: It is difficult for figures to be used in that way. If my hon. Friend will supply me with the information, I will check it against the figures in my possession.

Mr. Hale: Will my right hon. Friend bear in mind that I have asked him to


have an interview with the Assistant Chancellor of the Kabaka's Government, who was dismissed for making recommendations for improvements and that I am still waiting for that interview.

Mr. Beechman: In view of the interest of the House in this matter, will the right hon. Gentleman see that this information is published in HANSARD, so that we may all know what it is?

ROYAL NAVY (FREE TRAVEL WARRANTS)

Mr. Janner: asked the Parliamentary Secretary to the Admiralty if he is aware that the reduction of free railway warrants for members of the Royal Navy to two per year is causing great hardship to them, especially to the junior ratings who live a long way from their homes; and if he will take steps to improve the position by granting more warrants.

The Civil Lord of the Admiralty (Mr. Walter Edwards): The Fleet was warned last month that it might be necessary to reduce the number of free railway warrants for leave from three to two during the current year and that pending a decision only two were to be issued. The question of free leave travel is still under consideration, however, and no final decision has yet been made.

Mr. Janner: Does my hon. Friend realise that these seasonal leaves are given for ten days each, and that it is a great hardship, particularly to lower ratings, not to have these railway tickets, because they cannot, in many instances, get home at all without them?

Mr. Edwards: I quite realise that. I have been the possessor of free warrants in the past. As I have said, consideration is still being given to the matter. I would point out to the House that there were no free railway warrants given between the two wars, and that this is an advantage over what applied then. In addition to free railway warrants, members of the three Services can travel at half fare when going on leave.

Major Bruce: Is my hon. Friend aware that the new pay code was approved by this House on the understanding that facilities such as this would be fully main-

tained, and that this looks like giving with one hand and taking away with the other?

Mr. Edwards: It cannot be said that the new pay code was conditional upon four free railway warrants being given each year. It was given on the understanding that it would make the rates of pay and conditions in the Services more comparable with those in industry.

Lieut.-Commander Gurney Braithwaite: When the Civil Lord speaks of the number of free warrants going down to two in the current year, is he referring to the calendar year or the present financial year?

Mr. Edwards: I am referring to the current financial year.

Mr. Willis: Is my hon. Friend aware that unlike those of the Army and Air Force, all the manning bases of the Navy are in the South of England, and that this falls with particular hardship on Scottish ratings and ratings from the North of England? Would he consider that as an additional argument when considering the question of a manning base in Scotland?

Mr. Edwards: I hope that the question of a manning base in Scotland will not be judged in acordance with the number of free railway warrants we issue. The point my hon. Friend has raised is certainly borne in mind by the Admiralty when these matters are being discussed.

POST OFFICE (COLLECTIONS AND DELIVERIES)

Mr. Hurd: asked the Postmaster-General when he expects that new plates showing the revised timing of postal collections will be affixed to pillar boxes in Berkshire.

The Postmaster-General (Mr. Wilfred Paling): I am sorry that because of the sudden abnormal demand resulting from the recent changes in postal services, it has not yet been possible to provide new plates for pillar boxes in Berkshire, but I am assured that the revised timings of the postal collections should now be shown by means of temporary plates in all cases. New permanent plates will be provided as soon as possible.

Mr. Keeling: asked the Postmaster General whether he has made any further arrangements for the collection and delivery of letters posted at the House of Commons late at night.

Mr. Wilfred Paling: A collection is now being made at 7.45–8.o p.m. for first delivery on the following weekday throughout England and Wales. A supplementary collection is made after the rising of the House. On those occasions when the House is still sitting at 1.0 a.m. an additional supplementary collection is made at that hour. Letters for addresses in London, and posted in time for supplementary collections made up to 1.0 a.m. are due to be delivered by first post.

Mr. Keeling: Will the Postmaster-General say whether there is any objection to members of the public with urgent letters to post, which will not be collected from the letter boxes outside after 6.30 p.m. bringing them into the Outer Lobby and posting them there?

Mr. Paling: I am not sure about that.

Mr. Henderson Stewart: What is the latest time at which letters should be posted at the House for Scotland for arrival in Scotland by the first mail in the morning?

Mr. Paling: Seven forty-five or eight o'clock.

Oral Answers to Questions — ARMED FORCES

Requisitioned Land (Lapsing Date)

Mr. Granville Sharp: asked the Minister of Defence what are the lapsing dates of the requisition of land held by the Services Departments under Defence Regulations 51 and 52, respectively; whether land so held will then be returned to the owner; or what methods of retention he proposes.

The Minister without Portfolio (Mr. Arthur Greenwood): I have been asked to reply. For this particular purpose, the effective lapsing dates are 24th February, 1948, for Defence Regulation 51, and 31st December, 1947, for Defence Regulation 52. It is proposed, however, to introduce legislation to extend the towers for a further period.

Bombing Ranges

Mr. Digby: asked the Minister of Defence why it is necessary for the

Ministry of Supply to have separate bombing ranges, in addition to those held by the R.A.F. and Fleet Air Arm; and why Service requirements cannot be further coordinated in this respect with consequent economies.

Mr. Arthur Greenwood: Bombing ranges are shared whenever possible. In some cases, however, no facilities are available on a Service Department range which is conveniently located and otherwise suited for the research and development work for which the Ministry of Supply is responsible.

Mr. Digby: In view of the fact that the R.A.F. still hold 265 of this large number of bombing ranges, surely it is possible for those ranges to be used by Ministry of Supply aircraft?

Mr. Greenwood: The real point about it is, as I have tried to explain in the last sentence of my answer, that we are doing our best to combine bombing ranges as between the Royal Air Force and the Fleet Air Arm, but as the Ministry of Supply is very largely concerned with research and experimental work, it is not so easy to combine the three sets of ranges on the same sites.

Mr. Eden: Will the right hon. Gentleman look into this a little further. It is very hard to believe that with the number of bombing ranges there at present available to the Royal Air Force, the Ministry of Supply cannot make use of them, in view of the great demand for land for other purposes?

Mr. Greenwood: Certain ranges are, in fact, so used by the Ministry of Supply, but that cannot be made a principle.

Releases (Revised Programme)

Mr. Wyatt: asked the Minister of Defence whether he is now in a position to issue a revised programme of the age and service group numbers due for release between now and 31st March, 1948; and whether it is still the intention of the Government to have 1,085,000 men in the Armed Forces on 31st March, 1948.

Mr. Arthur Greenwood: I have been asked to reply. It is hoped very shortly to issue a detailed programme of release from the Armed Forces, by age and service groups, up to 31st December next. As to the second part of the


numbers of men it will be necessary to have in the Forces for the remainder of the present financial year, having regard to the continuing defence commitments of this country. My right hon. Friend is not yet able to say whether any variation of the figure of 1,087,000, given in the Defence White Paper issued last February, may he possible.

Mr. Wyatt: Does my right hon. Friend mean to say that the Government have not yet considered the implications of the reduction of the length of the conscription period from 18 to 12 months, and the consequent reduction that will mean in the strength of our Armed Forces by 31st March, 1948?

Mr. Greenwood: My right hon. Friend the Minister of Defence has this matter under most urgent consideration now, and it is hoped to make an early statement as to the figures for March, 1948.

Mr. Henderson Stewart: In the framing of the programme to which the right hon. Gentleman has referred, in reply to the first part of the Question, will special consideration be given to the case of young men who want to start their university careers quickly, without losing a further year?

Mr. Greenwood: Certainly.

Mr. Mikardo: Will the consideration to which my right hon. Friend has referred take into account the fact that the foreign currency expenditure on Armed Forces of this size is very much greater than the saving proposed by the reduction of visible imports?

Mr. Greenwood: That is an entirely different question.

Mr. Harold Davies: Is my right hon. Friend aware that we should save something like a few hundred million dollars if we were to bring men back and reduce these mysterious foreign commitments; and also that for this country to carry on these very large commitments at this moment is committing economic suicide, and that this suggestion for reducing them is the easiest way of getting rid of our adverse balance?

Oral Answers to Questions — FOOD SUPPLIES

Milk Production

Mr. Hurd: asked the Minister of Food the gallonage of milk produced in

May and June this year, compared with the same period last year; and the proportions used for manufacturing purposes.

The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summer-skill): Sales of milk off farms in the United Kingdom in May and June, 1947. are estimated to have been 305 million gallons, compared with 308 million gallons during the corresponding period in 1946. About 20 per cent. of the milk was used for manufacture in 1947 and 22 per cent. in 1946.

Mr. Hurd: In view of that information, why was it necessary to impose such an early cut in the ordinary consumers' ration of fresh milk?

Dr. Summerskill: Because it was quite impossible for us to anticipate the weather conditions in the winter, and the hon. Gentleman knows that we attribute the drop to the cold weather.

Mr. Hurd: Why was more milk used for cheese-making this year?

Mr. Walkden: Will the Minister tell the House whether any of this milk has been sent to chocolate manufacturers either for export purposes or for home consumption, and whether any of the milk has been used in a different way, including drying and processing, also to be sent abroad?

Dr. Summerskill: Certainly, some of the milk has been used for milk powder, for butter, cheese and condensed milk.

Mr. Walkden: What about chocolate? May I have an answer?

Dr. Summerskill: The hon. Gentleman should know that it is milk powder that goes into chocolate.

Mr. Seollan: Is the Minister aware of the very great indignation on the part of many housewives in the West of Scotland who suffer cuts in milk while at the same time they see Italian ice-cream shops well supplied with milk for the making of ice-cream?

Mr. Walkden: Answer that one.

Dr. Summerskill: I can assure the hon. Member I have never failed yet. [HON. MEMBERS: "Oh."] We believe the ex-trader should be given allocations in order to carry on the trade he had before the war.

Mr. John E. Haire: asked the Minister of Food (1) if he will give an assurance that wheat imports from the dollar areas will be maintained at the maximum available irrespective of the quantities obtained from soft currency areas, in order that bread rationing may be removed at the earliest possible date;
(2) if he is yet in a position to state the likely effect of this year's harvest in the northern hemisphere on food rationing in this country.

Dr. Summerskill: Our aim will be to get as much wheat as possible from any source. It is too early as yet to reach any conclusions about the harvests in the northern hemisphere or about the possibility of removing bread rationing.

Mr. Haire: Does my hon. Friend still regard the removal of bread rationing as the highest food priority in her Department?

Captain Crookshank: "Never failed yet."

Dr. Summerskill: The hon. Member must realise that there are carbo-hydrates, proteins and fats to consider, and I think perhaps if I were asked as a doctor what the highest priority was, I should say fats.

Whale Meat

Mr. Haire: asked the Minister of Food what supplies of whale meat have been made available off the ration in this country; and what has been the public response.

Dr. Summerskill: Whale meat is being imported and distributed by private traders. Supplies on a limited scale have been imported recently, but I have no information as to the precise quantity, and it is too early to form an opinion as to the public response.

Mr. Haire: Can my hon. Friend take any steps to increase the supply and distribution of this excellent food?

Dr. Summerskill: Yes, certainly. We are taking steps. We have given the traders import licences amounting to 6,000 tons.

Mr. Henderson Stewart: Would the Minister say, as a doctor, that whale meat is good for us?

Dr. Summerskill: Yes. Sir. Its protein value is as great as that of beef.

Mr. Keeling: Is the Ministry of Food giving any assistance to the public about how to cook it?

Dr. Summerskill: Yes. We are having experiments in our kitchens now. [Interruption.] Certainly, we always have experiments before we try anything on hon. Members opposite.

Price Controls (B.B.C. Announcements)

Mr. Piratin: asked the Postmaster-General whether he will arrange for the B.B.C. to grant facilities for announcements with regard to the change of price controls made from time to time by the Ministry of Food.

Mr. Wilfred Paling: My understanding is that under present arrangements all such changes are normally reported in the B.B.C.'s news bulletins.

Mr. Piratin: If the Minister would look into the matter further, I think he would find that this is not always the case. Would he take steps to work in co-operation with the Ministry of Food in this matter to ensure that special announcements are made after news items, so that the public are aware of the price decreases and increases, as the case may be?

Mr. Paling: I was assured that that was the case. I am told that these changes have been reported in the news bulletins at least on 17 days in the last four and a half months.

REQUISITIONED PREMISES, ABERDEEN

Lady Grant: asked the Minister of Works when his Department will be getting out of the club premises at 5–7, West Craibstone Street, Aberdeen, as the premises are urgently required for occupation by the owners.

The Parliamentary Secretary to the Ministry of Works (Mr. Durbin): I regret that in the absence of any suitable alternative accommodation I can see no prospect of these premises being released in the near future.

Lady Grant: is the Minister aware that the present accommodation in this club is


most unsatisfactory; that they have tried everything possible to suggest alternative accommodation to the Minister; and, as they cater for 700 industrial workers, will he do everything possible to secure alternative accommodation quickly?

Mr. Durbin: Certainly. I would only add to that assurance the statement that the club offered four alternative accommodations, no one of which was suitable and no one of which was large enough for the Ministry of Food office.

AGRICULTURAL MARKETING SCHEMES (REPORT)

Mr. Janner: asked the Minister of Agriculture whether the committee dealing with the question of revising various marketing schemes has yet reported; and whether it is intended to make its report and the evidence available before any legislation is introduced.

The Joint Parliamentary Secretary to the Ministry of Agriculture (Mr. Collick): No, Sir. The Committee, which, under the chairmanship of Lord Lucas, is inquiring into the Agricultural Marketing Acts, has not yet reported. It is intended to publish the Committee's report. My hon. Friend may be assured that there will be adequate time to study the report before the introduction of any legislation which in the light of the Committee's recommendations the Government may decide is needed to facilitate the marketing of agricultural and horticultural produce.

Mr. Janner: Can my hon. Friend give any indication when the Report will be available?

Mr. Collick: I anticipate that the Report should be available some time in the autumn.

Mr. Walkden: As we never appear to have had a statement about the range of inquiries of this particular Committee, can we be told beforehand whether they will cover every angle of distribution, including retail, wholesale and marketing generally?

Mr. Collick: The terms of reference of this Committee were published, and I am astonished that the hon. Member appears not 'to have knowledge of them.

COMMERCIAL DOCKS, GRIMSBY

Mr. Osborne: asked the Minister of Transport if he is aware that representations have been made to his Department and the Ministries of Food, Supply, Labour, and Board of Trade for the greater use of the Grimsby Commercial Docks whose trade today is approximately 40 per cent. of prewar; and, in view of the excellent facilities at these docks and the surplus labour now available, if he will set up an inter-departmental committee to investigate the possibility of their greater use.

The Parliamentary Secretary to the Ministry of Transport (Mr. G. R. Strauss): My right hon. Friend is aware of these representations. The loss of exports of coal and of imports by the short sea routes has resulted in a reduction in the trade of Grimsby as compared with the years before the war, although there has been an improvement in the first six months of this year as compared with the corresponding period of 1946. My right hon. Friend does not think that an inter-departmental committee to consider the position of the port is required.

Mr. Osborne: Will the Minister say when his Department will do something about this, because the men round this port did a very good job during the war and there is a lot of unemployment today? Surely his Ministry ought to do something for these people who are likely to be thrown out of work. Can anything he done?

Mr. Strauss: Various Ministries are doing what they can to see that this port gets an increased amount of trade, but I would like to tell the hon. Gentleman than in the first six months of this year the trade of this port was about 64 per cent. of the 1938 level as against 40 per cent. during last year.

Orders of the Day — FINANCE BILL

As amended (in Committee and on recommittal), further considered.

NEW CLAUSE.—(industrial and provident societies.)

(1) Where the person carrying on a trade or business is a registered society, the profits tax payable by the society shall be computed as if no net relevant distributions to proprietors had been made in the case of that trade or business for any chargeable accounting period.

(2) For the purposes of this section, the expression "registered society" means a society registered under the Industrial and Provident Societies Acts, 1893 to 1928, or under the enactments in force in Northern Ireland, known as the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1929. —[Mr. Glenvil Hall.]

Brought up, and read the First time.

3.20 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): I beg to move, "That the Clause be read a Second time."
This new Clause deals with industrial and provident societies. It provides that these societies should be charged the Profits Tax at the rate of 5 per cent., that is the lower rate, instead of the higher rate, namely 12½ per cent. The treatment of these societies was raised during the Committee stage of this Bill in the Debate on Clause 35, which deals with building societies, and a request was then made by certain hon. Members that industrial and provident societies should receive equal treatment with building societies.
The House will have noticed that building societies previously paid 1½ per cent., and that now, under the terms of this Bill, they will pay 3 per cent.; but that 3 per cent. has to be paid on profits before and not after deducting interest on loans or deposits. The 5 per cent. for industrial and provident societies, which it is proposed to incorporate in the Bill, will be computed on the ordinary basis, that is, after deducting loan but1not share interest. It may be asked by hon. Members opposite why the Co-operative societies, who are the chief organisations to benefit by this change, should be permitted to pay at the lower rate rather than the higher,

and the answer is that the share capital of these societies is not analogous to the ordinary share capital of commercial trading concerns. The lower rate will benefit largely small holdings of shares, and these shares are a sign of membership in the particular Co-operative society concerned.
I think that only about 20 per cent. of the share capital invested in this way is actually used to finance trading activities. The great bulk of it—I am told it amounts to something like 80 per cent. —is passed on to the Wholesale Society and invested by them, mostly in Government securities. Therefore it can be said that investments of this kind, that is, shares in Co-operative societies of this nature, are more investments accepted to encourage thrift than for use in the society's business. Investments of this kind take their place with those in many other corporations like those in a savings bank, and there is a limit, namely £200, placed on the amount which any individual can invest. Many of the members leave the interest which accrues to them to accumulate and be added to their holding, and do not normally withdraw it as and when it becomes due.
If the House assents that these features are there and that they do mark off industrial and provident societies from ordinary trading concerns, it does, I think, put them in a special category of their own, so that the dividends on their share capital is more akin to fixed interest on loan capital than to dividends on share capital in an ordinary company. Interest on loan capital is allowable as a deduction in computing profits for Profits Tax purposes, and does not rank as a distribution attracting the 12½ per cent. tax. A similar problem arose in 1937, and those hon. Members who were in the House then will recall the discussions that took place. The problem arose over building societies, and it was pointed out that there was little distinction between the share and loan capital of these societies, and, in that instance, by general agreement in all parts of the House, the situation was met by a special provision which limited the Profits Tax for such societies. As I have reminded the House, the Profits Tax has been 1½ per cent, up to now for building societies, and it is now proposed that it should be raised to 3 per cent.
When we had the discussion on the Committee stage, the Chancellor the Exchequer, after listening to the Debate, agreed that there was a case which should be considered. He has, in the interval, looked at it again, and has come to the conclusion that it will be fair and just to place these provident and industrial societies in this category of their own and to allow them to pay at the rate of 5 per cent. rather than the full.rate of 12½ per cent. The House will see that this is a compromise. My right hon. Friend has not accepted the suggestion that they should be placed exactly on all fours with the building societies and pay 3 per cent., but he has fixed a rate of 5 per cent. which he thinks is reasonable in the circumstances. I would add that, at the moment, they pay 5 per cent., and, therefore, so far as that is concerned, the position will really he unchanged, although I have to say that, in spite of the fact that the rates will remain the same, industrial and provident societies will, in fact, pay more under the legislation now going through the House.
If it is asked why Co-operative societies are placed in a different category from building societies, I think the short answer is that it is quite obvious from the facts and figures that they do not use this share capital to the full for trading activities, and that the greater proportion is invested mainly in Government stocks. Nevertheless, unlike building societies, some of it is used in trading activities, and, therefore, it is right, in the view of my right hon. Friend, to fix the rate at 5 per cent. This does indicate the difference between a Co-operative and a building society and also makes clear the difference between a Co-operative society and an ordinary trading concern. The financial effect, if the new Clause is accepted, will be that the cost will be about £250,000 per year, taking into account the fact that Profits Tax will be allowed as a deduction for Income Tax. The position of Co-operative societies as a whole will be that, whereas they formerly paid 5 per cent. on trading profits only, they will now pay 5 per cent. on trading profits plus investment income. The additional charge, I am informed, will be about £325,000 a year. I hope that, with that brief explanation, the House will agree with what my right hon. Friend

desires to do and will accept the incorporation of the new Clause in the Bill.

Mr. Assheton: This is one of the most barefaced proposals which I have ever heard made by a Government to benefit their own political friends. I listened with great interest to what the Financial Secretary said, and there was not a word in it which could justify this proposal. He started by drawing an analogy with building societies, which, as all hon. Members know, are in a wholly different position with regard to taxation, and always have been. The arrangements for taxation of building societies are on a wholly different basis, and their circumstances are totally different. The Financial Secretary, in fact, admitted that just now. He differentiated between the Co-operative societies and the building societies, saying that the position of their share and loan capital was different. He sought to justify it by saying that we are not going to give the Co-operative societies quite as good terms as we are giving to the building societies. I do not know whether hon. Members fully understand what this proposal means. It is not a proposal related to the dividend, which is the discount allowed to those who trade with the Cooperative societies; this is related to the interest received on the share capital of those who invest in Co-operative societies, and is, therefore, wholly analogous to the money invested in a company, or any other concern belonging to a private trader.
3.30 p.m.
I find it difficult to understand how the Financial Secretary has the effrontery to bring this proposal before the House. Of course, I have no doubt that he is very much encouraged by the fact that he has a very large majority. If a proposal of this sort, which is so obviously unjust, is pushed through the House. I cannot help feeling that there will be pretty serious reactions against a Government who are ready to indulge in this sort of financial trickery. I do not know whether the right hon. Gentleman thinks that because share capital in some concerns is limited to £200, they should be treated differently from concerns in which more can be invested. That is an argument which does not seem to have much justice or sense about it. I hope that the


Chancellor of the Exchequer will withdraw this monstrous Clause.

Mr. James Hudson: I am sorry to note the unfriendly way in which this Clause is received by hon. Members opposite. The right hon. Gentleman was careful to say that there was a separate case to be made out for building societies. Perhaps, had he told the House what that separate case was, he would have given away his opposition to another separate case to be made for the Co-operative movement. The Cooperative movement consists of people who are persuaded, as a matter of policy, to lay aside for capital purposes, in the price they pay for their commodities—in the form of an automatic sale—money that shall ultimately be used for general capital or social purposes. Preferably, it would be well to use it within the Co-operative movement, and those of us who are co-operators have advocated that it should be used in that way. Instead, in large measure, it is used, as the Financial Secretary explained, in the form of investments in Government stocks. It is a very good thing for the country, as well as for the individual co-operator, that there is this method of persuading literally millions of people—nine million people are members of the Co-operative movement—that this process of raising capital should be adopted.
That is the special case for the Co-operative movement, and it is as good a case—and can, in my judgment, be better defended—as any that could be made for the building societies. I am very glad that my right hon. Friend the Chancellor has made this concession, although I am not altogether sure whether he ought not to have made the full concession for which we asked. However, he has at least made this concession. I am perfectly certain that if the Conservatives wish to make this a debating point for electoral or general political purposes, they will have the greatest difficulty in explaining why this concession, which is readily allowed in other respects with reference to the building societies, should not be allowed to this highly beneficent social process that exists in the Co-operative movement, of persuading people to buy their goods at a price that will enable, at the end of a quarterly or yearly period, a sum to be

put aside, to be used as personal savings, and, ultimately, as social capital. I am certainly in favour of this proposal.

Lieut.-Commander Gurney Braithwaite: The Financial Secretary, in commending this new Clause to us, was at some pains to anticipate that some argument might devolve upon the Cooperative societies from, I think he said, this side of the House. I think his wisdom is revealed to us in anticipating the thunder from the hon. Member for West Ealing (Mr. J. Hudson), who has put before us what, of course, are the real reasons behind this proposal. First of all, nine million potential electors now demand their pound of flesh before the sands finally run out for the Socialist Government. Then there was some reference to beneficent social consequences. The hon. Gentleman did not make it clear to me, at least, just what those social consequences were going to be, unless it was that the Co-operative societies propose to lose a considerable amount of their depositors' money by investing it in the gilt-edged market in its present state of decline. I do not know whether that is what the hon. Gentleman who was thundering from the Left a minute or two ago had in mind.
There are one or two curious features about this proposal. If it is to be advanced on the ground which the Financial Secretary gave, one cannot really understand why it was not contained in the original Budget proposals. There has been a lapse of time since the introduction of the Budget which has made possible the perfect crime which is now placed before us. First of all, it allows time for the hon. Gentleman and his nine million friends to bring forward this ultimatum, because, quite obviously, that is what it is. The cheers from hon. Members opposite made it clear that the Government: had been told to stand and deliver on this matter; that there was to be no nonsense about it. Of course, the second thing that makes the crime perfect and only possible this week—and that is why it has been postponed until now—is the Government's attack on the reporting of Parliamentary Debates by the cutting down of newsprint, and it is now hoped that this matter will escape notice and will be able to be slipped through.
I submit that those are two obvious reasons for the delay in bringing this


matter forward. The Financial Secretary made an endeavour to probe into the past. He told us about some discussions which took place in 1937, when, as it happens, both he and I were temporarily absent from this assembly owing to the displeasure of certain electors, but, at least, he knows that there was no Profits Tax in 1937. I think we all know that. Why did he delve into the past and bring up a Debate in 1937, unless, of course, there was something connected with the National Defence Contribution which figured in the Finance Bill of that year? At any rate, the reference seemed a little obscure.
As regards building societies, I am not going to repeat some remarks which I made during the Committee stage, when I put forward—and I was one of those who stressed it particularly—the need for building societies to have some preferential treatment in this matter. The reason l gave was the one I repeat now, that there we have an instrument which is playing a useful part, and which can play a more useful part, and will do so when there is a change of Government on the rising of the people. The Co-operative societies have made no contribution whatever to the well-being of the people.

Mr. Gallacher: Is the hon. and gallant Gentleman not aware that the Co-operative societies have built very many comfortable and commodious houses at a nominal rent for members of the working classes?

Lieut.-Commander Braithwaite: I hope the hon. Member, whose frequent championship of the Methil Co-operative Society in connection with the naval base at Rosyth, we know, is comfortably housed under their auspices. Nothing is more likely to soothe his temper in this House than if he can be comfortably accommodated somewhere else.

Mr. Walkden: Is the hon. and gallant Gentleman not aware that after the last war, the Royal Arsenal Cooperative Society bought a whole housing estate which would have become derelict but for their support and financial aid in helping to house homeless people? Is he also not aware that within 12 miles of this House there are scores of houses which have been constructed by the Cooperative movement, and there are also hundreds of houses more which have

been built because the Co-operativemovement lent money to help working people to get their own homesteads?

Lieut.-Commander Braithwaite: I have no objection to the hon. Member for Doncaster (Mr. Walkden) attempting to put himself on side, after his rough treatment by the Parliamentary Secretary to the Ministry of Food. Of course, a limited number of houses of inferior quality have been put up under those auspices, and a certain number of working class people have been enabled by the Co-operative Society to buy their own houses Where the societies do that, of course, they are performing the function of building societies, which I am now advocating, in helping people to buy their own homes. But I repeat that, by and large, the Cooperative societies have made no contribution of any real value to the social wellbeing of the people in this country. They are and have been for a great many years a convenient method of evading taxation of one kind and another. I repeat here and now that the case for the building societies rests upon a social contribution of that kind. However, as I said earlier, the moment has arrived for the perfect crime. The Press are in course of being muzzled. The nine million co-operators have now presented the pistol at the Government's head. The hon. Member for West Ealing, having refreshed himself on non-alcoholic lines has come down here in an extremely ferocious frame of mind, and it will only remain for the Opposition to stand as the champions of social improvement by resisting this discriminatory tax.

Mr. Coldrick: I trust hon. Members will view this matter quite impartially, I quite appreciate the incapacity of the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) to draw a distinction between the Co-operative movement and a private company, but I wish to make that distinction clear. Before I do so, in order to disabuse the minds of hon. Members of the idea that the Co-operative movement is treated differently from any private company, I shall refer to the words of the right hon. Member for the Scottish Universities (Sir J. Anderson), who speaking in this House on 17th October, 1944, pointed out clearly:
Since 1933 the Co-operative Societies have been taxed on the whole of their profits in the


same way as limited companies. The "divi" paid by such societies, which is the sum paid as discount, rebate, dividend or bonus referred to in Subsection (3) of Section 31 of the Finance Act, 1933, is allowed as a deduction in arriving at the assessable profits in the same way as a discount or rebate allowed by a company would be deducted, and I am not prepared to propose legislation to alter this position, which is in accordance with the recommendations both of the Royal Commission on the Income Tax and the later Raeburn Comniittee."—[OFFICIAL REPORT, 17th October, 1944: Vol. 403, C. 2210.]

3.45 p.m.

Mr. Assheton: Will the hon. Gentleman agree that it will not be possible for any Chancellor of the Exchequer in future to say that, if this Clause becomes law?

Mr. Coldriek: Not at all. I want to indicate how the Co-operative movement functions, and to give some idea of the social benefits to which the hon. and gallant Member for Holderness referred. I understand from proclamations made by the Opposition that they believe in a property-owning democracy. They may believe in it as a theory, but I suggest that in the Co-operative movement we have that idea in practice. We have 91½ million members, with a capital of approximately £310 million. That means, approximately, that 9½ million people have an average shareholding of about £40 each. If that is not approximating towards the ideal suggested by hon. Members opposite, I should like to know what is.
We should realise that right from the beginning, the Co-operative movement, apart from being a trading organisation, has been an organisation with a social mission, and consequently it has inculcated the virtues of thrift and temperance—although that may not be acceptable by a large number of Members in this House—and self-reliance. It was for that reason that, as hon. Members opposite will learn if they care to look up their own history, many of their illustrious forbears condescended to go on platforms of the Co-operative movement and lavish praise upon the social improvements which that movement was effecting. In consequence of that, the great majority of the people in this country treat the local retail society not merely as a trading organisation, but as their banking institution, with the result that we find that in 1945, millions of people have not only placed deposits in the society but they

have allowed their dividends and interest to accumulate within the society to such an extent that it became literally impossible for the retail societies to employ the capital placed at their disposal in trade. That is why the Financial Secretary has indicated that out of a total capital of £310 million, approximately 86 per cent. has to take on the form of investment, and slightly less than 14 per cent. is involved in the trade.
That is where we differ from the private limited liability company. The whole of the capital is involved in the trade, and the profit is assessed on the basis of their capital, but the Co-operative movement, of course, employs only about 14 per cent. in trade. The rest of it is passed on, for the most part, by the local retail society to the Co-operative wholesaler, but by law we are denied the opportunity of acquiring more than a certain number of shares in the Co-operative Wholesale Society. As a matter of fact, our shareholding in the Wholesale Society is limited by the C.W.S. itself. For every two members of the retail society, we are allowed to take up one £5 share, so that the whole of the capital in a retail society cannot be invested in the trade so far as the wholesaler is concerned. That now means that we must, therefore, invest it in the banking accounts of the Co-operative Wholesale Society. But just as a retail society cannot engage the whole of its capital for trade, neither can the C.W.S. There are enough complaints on the part of the Opposition about the gigantic development of the Co-operative movement at the present moment, but if we should engage the whole of these capital resources in trade, I think they would begin to complain more bitterly.

Mr. Drayson: The hon. Member talks with such authority, and uses the word "we." Would he tell the House whether he has any interest in this Clause, and whether he has any shares in the Co-operative Society?

Mr. Coldrick: My shares are so infinitesimal that they would not influence any judgment or decision of mine on a matter of this kind. The investment of a member is limited to £200, and the hon. Member can imagine what interest I should receive on £200 at 2½ per cent. I think he will see it is not likely to colour my judgment in any way whatsoever. The


C.W.S., or great Co-operative Wholesale Society, is unable to employ the whole of the capital placed at its disposal in trade, and the result is that, of course, it is obliged to find investments and it places great sums at the disposal of the Government—even a Tory Government, not merely a Labour Government. It likewise takes up loan stock in local corporations, and so on. Vast sums of money that we placed in investments because we could not engage it in trade, earn interest, which we pay out in interest upon the share capital; but as a local society, we make no profits on the transactions at all, because, as the local member hands it in to the retail society, so the retail society lends it to the Wholesale Society, and passes it on. Is any hon. Member opposite going to argue that because money is placed in a branch of some great banking institution that branch should be taxed? Of course, it should not. The retail society is merely being placed in the position of the branch of a bank.
Without making a long speech I want to indicate that the Bill has two intentions. The first is to prevent inflation, and the second to plough back capital into business. As we know, at the present moment, if the Bill stands as it is, without the introduction of the new Clause, instead of being anti-inflationary, it would be inflationary; because what we should be constrained to do is to prevent members of the community, those millions of people, putting money into the Co-operative societies. We should be obliged to convert the share capital into loan capital. Therefore, we should he handing out the money to the members, which, once in their hands, would become purchasing power. That would have tended toward an inflationary situation which we are endeavouring to avoid. Secondly, for the information of hon. Members who do not seem to know, I would indicate that the great majority of members of Co-operative societies permit their interest and their dividends to accumulate within the retail societies to the extent of about 65 per cent. of the amount to which they are entitled. The whole of that is used by the Co-operative movement for purposes such as I have indicated. But if this Measure were adopted without this Clause, I am afraid we should have to restrict all those prac-

tices, and consequently prevent people from saving as they are at the present moment.
There are many other things I should like to say in connection with this, but conclude by reminding the House that the Co-operative movement from its inception has endeavoured to keep prices within the means of the great majority of people, and has expended and is expending substantial sums of money on education, housing, and the institution of social services to relieve the distress of its members. When private companies are ready to act on that principle, I shall be prepared to back them if they wish to receive precisely the same terms.

Mr. Walter Fletcher: The very interesting picture of the activities of the Co-operative movement given by the hon. Member for North Bristol (Mr. Coldrick) is not quite complete in certain directions. I saw the very great merits of the Cooperative movement when it was being run entirely for the purposes and aims for which is was originally created. I happen to have, in the area I represent, a Co-operative with a Conservative majority, and so I speak with certain backing. But the picture that the hon. Member has painted is far from complete. Near where I live in the country, one of the local Co-operatives has recently purchased a very large and handsome estate, and I have during the shooting seasons seen the managers and directors having a pleasant afternoon's shooting. That, in its way, is an admirable thing; but whether the people who have put money into that "Co-op" know it is rather different.
There seems to be a point here. A public company has to have articles and a memorandum showing the shareholders exactly for what purposes their money is to be used. I believe that one of the dangers of the "Co-op" movement—as one of its backers I put this forward seriously—is that it is has departed widely from its original aims. It has been buying cinemas, and going into every form of industry. That is probably, in its way, a good thing. But let us be quite clear about it. H it is going in for this form of competition, it should not be unduly favoured by comparison with other organisations—in undertaking things which were not its primary functions I think there is a very considerable danger that the Co-operative movement, which


has, in my view, performed great and useful functions for this country, is going to lose a great deal by going on as it is, partly for the reasons I have given, and partly for the political use to which it may put its funds.
If an organisation asks people to invest in it, so that they will be able through it, to purchase their goods or any services which may be provided in the best way, and because thus they will get the best deal, then surely it should limit the uses of the enormous funds accumulated as described by the hon. Member for North Bristol. But if it is going forward into the political arena, and using that money for that purpose, it should be made known in the same way as the activities of private enterprises are known through the articles and memoranda of association.

Mr. Coldrick: Is not the hon. Member aware that all Co-operative members read a quarterly—sometimes, a monthly—statement made by the board of directors in great detail, and issued to the whole of the membership so that there cannot possibly be any doubt or ignorance amongst the members as to what is being done with their funds?

Mr. Fletcher: I think that in spite of that the directors—

Mr. Speaker: We are discussing a new Clause, and we are not discussing the whole history of the Co-operative movement. I think the Debate is going rather wide.

Mr. Fletcher: I was only replying to things which the hon. Member for North Bristol has said. I do believe that the "Co-op." is being harmed in a way by the undue favour that is being shown to it as against private enterprise.

Mr. Sydney Silverman: I am a little puzzled by this. I did not have the advantage of hearing my hon. Friend move the new Clause. I have heard the last two or three speeches, which seem to be about Co-operative societies. But when I look at the marginal note of the new Clause I cannot find that there is anything about Co-operative societies in it. The marginal note is about industrial and provident societies. I should like to know from whoever is to reply to this discussion whether the bene-

fits, if there are benefits, of this new Clause, are limited to Co-operative societies, or in what way the Co-operative societies become a proper object of Debate under it. I can quite see that the benefit of the Clause would go to the Co-operative societies as well. There are a lot of Cooperative societies which gives me joy. I understand that hon. Members opposite do not share my joy. But I suppose that many other organisations will benefit by this Clause that are not Co-operative societies. I understand that there are a great many organisations and associations which will be covered by such benefits as the Clause gives—associations of allotment holders, for instance, and any kind of agricultural association, and a great many clubs. I understand that hon. Members opposite are interested in clubs, and that the interest in clubs on the other side of the House is as great as the interest in Co-operative societies is on this side. It is rather a pity that something which would confer a benefit on a particular type of society is criticised and cavilled at by hon. Members opposite, because other associations they happen not to like, and whose political affiliations are obnoxious to them, may happen to benefit as well.

4.0 p.m.

Mr. Oliver Stanley: I think that the hon. Member for Nelson and Colne (Mr. S. Silverman) would not have made that speech had he had the privilege, as we had, of hearing the Financial Secretary introducing the new Clause, because he would have realised that the Financial Secretary devoted the whole of his arguments, so far as I could follow them, to the justification of the position of the Co-operative societies. The right hon. Gentleman made it quite plain that it was the Co-operative societies who were the main object of this Clause and who, as I think he said, were the main beneficiaries. Very often, in these financial Debates, I have a great deal of sympathy with the Financial Secretary of the Treasury, because I am pretty certain when I see him put up to move an Amendment or a new Clause that there is not very much to be said in favour of it. I was not this time wrong.
The hon. Member for North Bristol (Mr. Coldrick) spoke from a great deal of knowledge, because he is intimately connected with the Co-operative societies of


whose internal working he spoke with such authority. I have a considerable amount of sympathy with what he said. The trouble is that, as he must realise, what we are dealing with here is a tax which applies to all forms of companies. It happens to be an extremely bad tax. The trouble of which he complained when this tax is applied to the particular organisations in which he is interested, comes from the inherent badness of the tax itself. Equally hard results can be shown by those interested in other forms of industrial organisations who suffer unfairly from the incidence of a tax which 10 years ago, when the Chancellor of the Exchequer was both younger and wiser, he was himself the first to condemn.
No one on this side of the House, I am sure, would display—certainly I would not—hostility either to the object or the methods of the Co-operative societies as such. Whether they always spend their surplus money which they acquire with the utmost wisdom is not for me to say. Whether the visible results of their successful trading which we see in this House are on the same level as the admirable goods which we see displayed in their shop windows is not for me to judge; but so long as they compete with private enterprise on equal terms and without discrimination in favour of the Co-operative societies, no one on this side of the

House is, I am sure, entitled to protest. What we see here is a remarkable example of discrimination in favour of the Cooperative societies. What the hon. Member for North Bristol has to remember—because in his speech he certainly omitted altogether to mention it—is that the whole of this tax when applied to ordinary industry is based not on how the capital is acquired or used, but entirely on the distribution that is made to the shareholders.

Once we say that the Co-operative societies or any other trading concern have not to pay the same tax on distribution to their shareholders that a grocery store next door has to pay, then we are discriminating unfairly between the two. It is because of that, that we should like to see this relief applied to all industrial concerns; in other words, we should like to have seen a bad tax never put on. We shall vote against this Clause, not because it removes from the Co-operative some of the disadvantages of a bad tax, but because it discriminates in favour of the Co-operative society by leaving the whole of the rest of private industry still to bear the results of the Chancellor's very bad second thoughts.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 232: Noes, 109.

Division No. 310.]
AYES
[4.6 p.m.


Adams, Richard (Balham)
Chater, D.
Fernyhough, E


Adams, W. T. (Hammersmith. South)
Chetwynd, G. R
Fletcher, E G M (Islington, E.)


Allen, A. C. (Bosworth)
Cluse, W S
Follick, M.


Allen, Scholefield (Crewe)
Cocks, F. S
Forman, J C


Anderson, A. (Motherwell)
Coldrick, W
Foster, W (Wigan)


Attewell, H. C.
Collick, P
Fraser, T. (Hamilton)


Austin, H. Lewis
Collins, V. J
Gallacher, W.


Awbery, S. S
Colman, Miss G M
Ganley, Mrs C S


Ayles, W. H.
Comyns, Dr. L
Gibbins, J


Ayrton Gould, Mrs B
Cove, W. G
Glanville, J E. (Consett)


Balfour A.
Crossman, R. H S
Greenwood, Rt Hon A (Wakefield)


Barstow, P G
Daggar, G.
Greenwood, A W J (Heywood)


Barton, C.
Dalton, Rt. Hon. H.
Grenfell, D R


Battley, J. R.
Davies, Edward (Burslem)
Grey, C. F.


Bechervaise, A. E
Davies, Ernest (Enfield)
Grierson, E


Belcher, J. W
Davies, Harold (Leek)
Griffiths, D (Rother Valley)


Benson, G.
Davies, Hadyn (St. Pancras, S W)
Griffiths, Rt Hon J. (Llanelly)


Bing, G. H C
Davies, R J (Westhoughton)
Griffiths, W D (Moss Side)


Binns, J
Deer, G.
Guest, Dr. L Haden


Blackburn, A. R
Delargy, H. J
Gunter, R. J


Blyton, W. R.
Diamond, J.
Guy. W. H.


Bowles, F. G. (Nuneaton)
Dobbie, W
Haire, John E (Wycombe)


Braddock, Mrs. E. M. ([...] Exch'ge)
Dodds, N N
Hale, Leslie


Brook, D. (Halifax)
Driberg, T E. N.
Hall, W. G.


Brooks, T. J. (Rothwell)
Dumpleton, C. W
Hamilton, Lieut.-Col. R


Brown, George (Belper)
Edelman, M.
Hannan, W (Maryhill)


Brown, T. J. (Ince)
Edwards, A. (Middlesbrough, E.)
Hardy, E. A.


Bruce, Maj. D. W. T
Edwards, Rt. Hon. Sir C (Bedwellty)
Harrison, J.


Buchanan, G.
Evans, E. (Lowestoft)
Hastings, Dr. Somerville


Callaghan, James
Evans, S. N (Wednesbury)
Henderson, Joseph (Ardwlck)


Carmichael, James
Ewart, R.
Herbison, Miss M


Castle, Mrs. B. A
Fairhurst, F
Hicks, G.


Champion, A. J.
Farthing, W J
Holman, P




Helmes, H. E (Hemsworth)
Neal, H. (Claycross)
Strauss, G. R (Lambeth, N.)


House, G
Nichol, Mrs M E (Bradford, N.)
Stross, Dr. B


Hoy, J.
Nicholls, H R (Stratford)
Stubbs, A. E.


Hudson, J H. (Ealing, W.)
Noel-Baker, Capt. F E (Brentford)
Summerskill, Dr. Edith


Hughes, H D (Wolverhampton, W.)
Oldfield, W H.
Swingler, S


Janner, B
Orbach, M.
Sylvester, G. 0


Jay, D. P T.
Palmer, A. M. F.
Symonds, A. L.


Jeger, Dr S. W. (St. Pancras, S. E)
Pargiter, G. A.
Taylor, H. B. (Mansfield)


John, W.
Parker, J.
Taylor, R. J. (Morpeth)


Jones, D. T. (Hartlepools)
Parkin, B. T.
Taylor, Dr. S. (Barnet)


Keenan, W.
Paton, J. (Norwich)
Thomas, D. E. (Aberdare)


Kirby, B. V.
Peart, T. F.
Thorneycroft, Harry (Clayton)


Kirkwood, D
Poole, Major Cecil (Lichfield)
Thurtle, Ernest


Lavers, S.
Popplewell, E.
Tiffany, S.


Lawson, Rt Hon. J. J.
Porter E. (Warrington)
Timmons, J.


Lee, F (Hulme)
Porter, G. (Leeds)
Tilterington, M. F.


Leslie, J. R.
Pryde, D. J.
Tolley, L.


Lipson, D L.
Randall, H. E.
Turner-Samuels, M.


Lipton, Lt.-Col M
Ranger, J.
Ungoed-Thomas, L.


Logan, D G
Rankin, J
Vernon, Maj. W F.


Longden, F.
Reeves, J.
Viant, S. P


Lyne, A. W.
Richards, R.
Walkden, E.


McAdam, W.
Ridealgh, Mrs. M.
Walker, G. H.


McAllister G.
Robertson, J. J. (Berwick)
Wallace, G. D. (Chislehurst)


McEntee, V. Lt.
Rogers, G. H. R.
Watkins, T. E.


McGhee, H. G.
Ross, William (Kilmarnock)
Watson, W. M.


Mack, J. O.
Royle, C.
Webb, M. (Bradford, C.)


McKay, J. (Wallsend)
Scollan, T.
Wells, P. L. (Faversham)


McKinlay, A S
Scott-Elliot, W
West, D. G.


Maclean, N (Govan)
Segal, Dr. S.
Whiteley, Rt. Hon. W.


McLeavy, F
Sharp, Granville
Wilkes, L


Mainwaring, W H.
Shurmer, P.
Wilkins, W. A.


Mann, Mrs. J.
Silverman, J. (Erdington)
Willey, O G. (Cleveland)


Manning, C. (Camberwell, N.)
Silverman, S S. (Nelson)
Williams,?. J. (Neath)


Manning, Mrs. L. (Epping)
Simmons, C. J.
Williams, J. L. (Kelvingrove)


Medland, H M.
Skeffington, A. M
 Williams,. Rt. Hon. T. (Don Valley)


Middleton, Mrs L
Skinnard, F. W.
Williams, W. R. (Heston)


Mikardo, Ian
Smith, H. N (Nottingham, S.)
Willis, E.


Mitchison, G. R.
Smith, S. H. (Hull, S.W.)
Wills, Mrs. E A


Monslow, W.
Snow, Capt. J W.
Woods, G. S.


Morris, P (Swansea, W.)
Sorensen, R. W.
Wyatt, W.


Mort, D. L.
Soskice, Maj. Sir F
Yates, V. F.


Moyle, A.
Sparks, J. A.
Zilliacus, K.


Nally, W.
Stamford, W.



Naylor, T. E.
Stewart, Michael (Fulham, E.)
TELLERS FOR THE AYES.




Mr. Pearson, and Mr. Dalnes:




NOES


Amory, D. Heathcoat
Hannon, Sir P (Moseley)
Osborne, C.


Anderson, Rt. Hon. Sir J. (Scot Univ)
Headlam, Lieut-Col. Rt. Hon. Sir C
Peake. Rt Hon. O


Assheton, Rt. Hon. R.
Hollis, M. C.
Peto, Brig C. H. M


Astor, Hon. M
Holmes, Sir J. Stanley (Harwich)
Pickthorn, K.


Baldwin, A. E
Hope, Lord J
Ponsonby, Col. C. E.


Beamish, Maj T V. H
Hudson, Rt Hon R. S. (Southport)
Prescott, Stanley


Birch, Nigel
Hulbert, Wing-Cdr N. J.
Price-White, Lt.-Col. D.


Boothby, R
Hutchison, Col. J. R (Glasgow, C)
Reed, Sir S. (Aylesbury)


Bossom, A. C.
Jarvis, Sir J.
Reid, Rt. Hon. J. S. C. (Hillhead)


Braithwaite, Lt.-Comdr J G
Keeling, E H.
Roberts, Emrys (Merioneth)


Bromley-Davenport, Lt.-Col. W
Kerr, Sir J Graham
Roberts, H. (Handsworth)


Buchan-Hepburn, P G. T.
Lambert, Hon. G.
Roberts, Maj. P. G (Ecclesall)


Byers, Frank
Lancaster, Col. C. G.
Roberts, W (Cumberland, N.)


Channon, H.
Law, Rt. Hon. R. K.
Robinson, Wing-Comdr. Roland


Clarke, Col R S
Linstead, H N
Ropner, Col L


Clifton-Browne, Lt.-Col G
Lloyd, Selwyn (Wirral)
Sanderson, Sir F


Conant, Maj. R. J. E
Lucas, Major Sir J
Savory, Prof. D L


Cooper-Key, E. M.
Lucas-Tooth, Sir H
Shepherd, W S. (Bucklow)


Crookshank, Capt. Rt. Hon. H. F. C.
Lyttelton, Rt. Hon. O
Smithers, Sir W.


Crosthwaite-Eyre, Col. O. E.
Macdonald, Sir P. (I of Wight)
Spearman, A. C. M


Crowder, Capt. John E
McKie, J. H (Galloway)
Stanley, Rt. Hon. O


Cuthbert, W. N.
Maclay, Hon. J. S
Stoddart-Scott, Col. M


Davidson, Viscountess
MacLeod, J
Strauss, H. G. (English Universities)


Davies, Clement (Montgomery)
Macmillan, Rt. Hon. Harold (Bromley)
Studholme, H G


Dodds-Parker, A. D
Macpherson, N (Dumfries)
Thorneycroft, G. E. P. (Monmouth)


Donner, Sqn.-Ldr P W
Maitland, Comdr. J. W.
Touche, G. C.


Dower, Lt -Col A V G. (Penrith)
Manningham-Buller, R E
Turton, R. H.


Drayson, G B
Marples, A. E
Vane, W. M F.


Drewe, C.
Marsden, Capt. A
Wadsworth, G.


Dugdale, Maj. Sir T. (Richmond)
Marshall. D (Bodmin)
Walker-Smith, D


Eden, Rt. Hon A
Mollor, Sir J.
Wheatley, Colonel M. J.


Fleming, Sqn.-Ldr. E. L.
Morris, Hopkin (Carmarthen)
Williams, Gerald (Tonbridge)


Fletcher, W (Bury)
Morrison, Rt. Hon. W. S. (Cirencester)
Willoughby de Eresby, Lord


Gammans, L. D.
Mott-Radclyffe, Maj. C. E.



Glyn, Sir R
Neven-Spence, Sir B
TELLERS FOR THE NOES:


Grant, Lady
Nicholson, G
Major Ramsay and


Gridley, Sir A
Noble, Comdr. A, H. P
Lieut -Colonel Thorp.


Grimston, R V
Orr-Ewing, I. L



Question put, and agreed to.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Amendment of limit on amount allowable as deduction in respect of directors' remuneration.)

In paragraph 11 of the Fourth Schedule to the Finance Act, 1937 (which limits the amount of the deduction to he allowed in respect of the remuneration of certain directors in computing for the purposes of profits tax the profits arising from a trade or business carried on by a company in which the directors have a controlling interest), for the words "fifteen hundred pounds" wherever those words occur there shall be substituted the words "two thousand five hundred pounds." —[The Solicitor-General.]

Brought up, and read the First time.

4.15 p.m.

The Solicitor-General (Sir Frank Soskice): I beg to move, "That the Clause be read a Second time."
Hon. Members will know that the Profits Tax is really assessed on the principles of the National Defence Contribution, to which it is a successor. The 1937 Act, which governs the basis of National Defence Contribution, lays it down, in paragraph 11 of the Fourth Schedule, that the amount which may be deducted, in computing profits as remuneration of directors other than whole-time service directors not earning more than 5 per cent. of the ordinary share capital, in the case of director-controlled companies, is not to exceed £1,500 or 15 per cent. of the profits, subject to an overall limit of £15,000. The £1,500 will, of course, apply only to small companies whose profits are not more than £10,000. It was represented during the Committee stage that in present circumstances the limit ought to be raised, and this Clause seeks to raise it to £2,500. The circumstances which give rise to the necessity for a change are the alteration in the cost of living, and that kind of circumstance. This Clause gives effect to a suggestion which originated from hon. Members opposite.

Mr. Stanley: I do not know whether it is your intention, Mr. Speaker, to call the Amendment to the proposed Clause stand ing in the name of my hon. Friend the Member for Chippenham (Mr. Eccles).

Mr. Speaker: Yes, but I cannot do so until the Clause has been read a Second time. When it has been read a Second time, I shall call the Amendment.

Mr. Stanley: I am much obliged, because that being so, I will postpone the remarks I wished to make, except to thank the right hon. Gentleman for having met us halfway in what we asked. We shall have an opportunity to discuss the other half on the Amendment.

Mr. Leslie Hale: As I understand it, the figures in the Finance Act, 1937, are £1,500 or 15 per cent, of the net profits, whichever is the greater, subject to the overriding maximum of £15,000, and that this allowance does not apply to full-time working directors. Therefore, the whole of this sum is available to part-time directors, but not to full-time directors. In view of that, I should have thought this Clause needed a little more explanation. In any case, it will affect only very small companies.

The Solicitor-General: The intention is that it shall affect only small companies. We have two upper limits, the 15 per cent. or the £1,500, and the limit of £1,500 will apply only where the 15 per cent. is less. Director-controlled companies which are very small, are very similar to partnerships, and this Clause is designed to affect these sort of small companies. After all, this has been part of our taxation legislation since 1937, and all we are doing is to alter the limit. We feel that we have hit on the right limit in the case of the small company, and that we have gone a proper distance towards meeting the suggestions which have been made.

Clause read a Second time.

Colonel Crosthwaite-Eyre: I beg to move, as an Amendment to the proposed Clause. in line 7, at the end, to add:
and for the words 'fifteen thousand pounds,' there shall be substituted the words 'twenty-five thousand pounds.'
As I understood the Solicitor-General when we were discussing this Clause, his intention is merely to alter the situation for small companies. If he will cast his mind back, he will remember that we tried at an earlier stage to make a case for all companies. That case was based on the very simple premise, that the value of money has completely changed. Whether we buy services or goods, we have to pay much more—very often double—than we paid before the war.


We feel that in the case of director controlled companies, if the Government are going to make a concession, they must make a concession to cover all. No reason has been advanced from the Government Front Bench as to why only small companies should be covered. We want all companies, big or small, to get the same concession in view of the change in the value of money So far as I know, it will not cost the Government very much, and it seems only elementary justice that where circumstances have changed, and the Government admit that, they should make their concessions cover every section of industry, and not only one section

Lieut.-Commander Braithwaite: I beg to second the Amendment.

The Solicitor-General: We have carefully considered the suggestion made in this Amendment. The new Clause was the result of our reflection on all the arguments which were adduced and which, as the hon. and gallant Member for New Forest and Christchurch (Colonel Crosthwaite-Eyre) has just said, were directed both to the lower and upper limit. The suggestion was that both should be altered, and what we have proposed is a compromise which affects the lower limit. The £15,000 will affect only the very large director-controlled companies whose profits exceed £100,000. It is a question of degree; the line has to be drawn somewhere, and the question is whether, in the case of the £15,000 limit, it can be said that circumstances require that that should be revised. In the case of the very small concern it is felt that that, being rather like a partnership, and having regard to the changed value of money, is not adequate. But we do not think that the same considerations can be urged with regard to what we consider a generous allowance. It will apply only to companies which are director-controlled, and whose profits exceed £100,000. I am very sorry to say that we feel that no case has been made out with regard to the upper limit, and I must therefore ask the House not to accept the Amendment

Mr. Stanley: The explanation of the hon. and learned Gentleman is not very satisfactory. If we base the change in the figure in this Clause on the change in the value of money, then the value 9f money has changed equally in both cases.

If there is a logical case for doing it in one instance, there is equally a logical case for doing it in the other. On the other hand, this goes some way towards what we believe to be fair, and it would be unwise and foolish to expect this Government to see sense all at one go. We are content to accept half sense this time, in the sure and certain belief that when the Chancellor has had a year to think it over, he will realise the full strength of our argument, and will give us the other half next year.

Amendment to the proposed Clause negatived.

Clause added to the Bill.

NEW CLAUSE.—(Relief from estate duty on bearer securities compulsorily registered.)

Where, in consequence of the restrictions imposed by the Defence (Finance) Regulations, 1939, or the Exchange Control Act, 1947, on the issue of coupons representing dividends or interest, bearer securities situate outside the United Kingdom have been or are converted into or exchanged for registered securities situate in Great Britain, then for the purposes of any claim for estate duty in respect of the passing of the registered securities on a death occurring after the thirty-first day of March, nineteen hundred and forty-seven, they shall be treated as situate outside Great Britain:

Provided that this Section shall apply only if, between the conversion or exchange and the death (or, in a case where the securities pass by reason of a gift inter vivos or of the disposition or determination of an interest limited to cease on the death, between the conversion or exchange and the gift, disposition or determination), the securities neither have been disposed of nor have passed on the death of a person competent to dispose thereof.—[Mr Glenvil Hall.]

Brought up, and read the First time

4.25 p.m.

Mr. Glenvil Hall: I beg to move, "That the Clause be read a Second time."
This Clause deals with liability for Estate Duty consequent on enforced conversion, as an exchange control measure, of bearer securities held abroad. As a wartime measure, it became an obligation, under the Defence Regulations, for bearer securities to be registered in this country, and that being so, it affected very materially the liability for Estate Duty if the owner of the securities happened to be a person who was domiciled abroad. Normally, under the law, the obligation


and liability to pay Estate Duty follows on the situation of the securities concerned, and if the securities were situate here they would normally have been liable to pay Estate Duty, although they were owned by someone whose domicile was overseas.
In order to be just to those concerned it was decided that if it could be shown that the person who owned the securities at the time of his death was the same person as owned them at the time they were registered, and transferred from abroad, Estate Duty would not be payable in respect of those registered securities. It was accepted by most people that when the Defence Regulations came to an end—the Regulation in this case is Regulation 3B—that would be dropped, and people would be entitled to have their securities retransferred into bearer. Under the Exchange Control Act, the holding of bearer securities will not be allowed, and what the Chancellor does here is to continue the wartime concession so that under the new Act, which will take the place of Regulation 3B, people in the position I have described will still have the advantage of the wartime concession, which, by general agreement in all parts of the House, was granted at that time.

Lieut.-Commander Braithwaite: I found it necessary, a little earlier, to speak in somewhat critical language of the Financial Secretary's speech when commending to us a Clause dealing with Co-operative societies. It is, therefore, with all the greater pleasure that I commend him now for the admirable manner in which he has introduced a Clause which, I think, will be generally acceptable to the House. This is a matter of great complexity, and one over which many people could wonder for hours. The difficulty of the mechanics of collecting Estate Duty on various securities has troubled many professional men for many years, and the Government are to be congratulated on putting this matter right in this new Clause. I cannot employ the language of the hon. Member for West Ealing (Mr. J. Hudson), and say that this should be supported on the grounds of the social uplift which it will bring us. This is a more mundane matter; here, we are keeping our feet on the ground, and this technical matter is now being adjusted. The confident manner in which the right hon. Gentleman has just moved this new Clause shows how different he is, when pleading a just case, from

the less comfortable attitude in which he found himself when moving the earlier Clause.

Mr. Bowles: Can my right hon. Friend explain the proviso to the new Clause? I am not clear whether this restricts holders of scrip who are still holders on the date of their death.

Mr. Glenvil Hall: I thought I had covered that point—I agree briefly, because I did not want to waste the time of the House. The answer to the question, if I understand it aright, is that if the executors of a person who dies can show that he owned those securities in bearer form, and was the owner at the time when they were compulsorily transferred into registered securities, he would have the benefit of this particular concession, provided, of course, that he fulfilled the other obligation which falls upon that estate, that the domicile would be abroad, and so on.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Repeal or reduction of duties on legal professions.)

(1) The following headings in the First Schedule to the Stamp Act, 1891, shall cease to have effect, namely—

(a) Admission in England of any person to the degree of barrister-at-law;
(b) Admission in Scotland of any person as an advocate;
(c) Admission of any person to be a member of either of the four Inns of Court in England;
(d) Admission of any person as a solicitor of the Supreme Court in England;
(e) Admission in Scotland of any person as a law agent (both paragraphs);
(f) Faculty, Licence, Commission or Dispensation for admitting or authorising any person to act as a notary public;
and no stamp duty shall be payable on the admission of any person as a solicitor under Section thirty-five of the Solicitors Act, 1932, or, in Scotland, Section one of the Colonial Solicitors Act, 1900.

(2) The duty chargeable under either of the headings "Articles of Clerkship" in the said First Schedule shall in all cases be two shillings and sixpence and accordingly for those headings there shall be substituted the following heading:—



s.
d.


"Articles of Clerkship whereby any person becomes bound to serve as a clerk in order to his admission as a solicitor of the Supreme Court in England or as a solicitor in Scotland
2
6

(3) The duty chargeable under the heading "Certificate to be taken out yearly" in the said First Schedule shall be one twentieth of the amount chargeable immediately before the coming into force of this Subsection.—[The Solicitor-General.]

Brought up, and read the First time.

4.30 p.m.

The Solicitor-General: I beg to move, "That the Clause be read a Second time."
This new Clause abolishes a number of duties on admission to the various learned professions. First, it abolishes the tax upon admission to the degree of barrister in England or advocate in Scotland—that is, £50. Then it abolishes the duty on admission to either of the four Inns of Court in England. That is a phrase taken from the Stamp Act, 1891. I do not know what "either of the four Inns of Court" meant then, but that is the phrase used in that Act. It abolishes the duty on admission of any person as a solicitor of the Supreme Court in England, and as a law agent in Scotland. It also abolishes the duty for authorising a person to act as a notary public. Subsection (2) reduces to a nominal amount the duty payable on articles of clerkship for the purpose of becoming a solicitor in England or in Scotland. Subsection (3) reduces to one-twentieth the duty payable on a practising certificate taken out yearly by a solicitor.
This particular matter has been a bone of contention for a great many years. Indeed, in 1850 and 1853, Bills were introduced in the House with the object of reducing these various duties. They are, in effect, simply a tax upon admission to the learned professions, which in no sense can be said to serve any useful social purpose. The suggestion that they should be removed originated from a number of my hon. Friends, and received support from both sides of the House during the Committee stage. This new Clause is designed to give effect to those proposals.

Mr. Bing: We ought not to allow this occasion to pass without first congratulating the Chancellor on succeeding in doing what Mr. Gladstone set out to do in 1870, but was never able to achieve, because the tax which we are repealing at the moment originates, in its present form—although in part from the

Stamp Act, 1891r—from the Stamp Act, 1870. As my hon. and learned Friend has said, there was considerable difficulty in getting it through the House, and it was only got through because Mr. Gladstone assured everyone that the only purpose of collecting these duties together was to discover what they were and how they could be repealed. The Chancellor of that day said this:
He looked on this Bill not as a settlement but only as a beginning—as laying the foundation for future labours in the field.
There have been other labourers in the field, and I think we ought to pay the very greatest tribute to the party opposite. In 1937 they began the repeal, and indeed did remove the very heavy duty which weighed on the backs of the aristocracy; the very heavy charges which were payable by Stamp Duty when one was raised from one rank to another in the nobility were removed by the party opposite. But I cannot help feeling that were Mr. Gladstone alive today he would have put the encouragement on learning, and the opening of the learned professions to all classes, before the relief of indigent peers.
However, be that as it may, it is perhaps worth while looking for a moment at the history of the tax, because it is probably one of the oldest taxes at present in force. It was introduced by King William III. His Government copied the tax from Holland, where it had obtained for some time before. I am indeed sorry that none of the hon. Members who represent Northern Ireland are with us today, because I am sure they would impress upon the House the very grave danger of departing from any principles laid down by that Government of that particular monarch. All I can say in their favour is the general view they have expressed, that it is never necessary to go beyond 1690; and as the Stamp Act of King William dates from 1694, perhaps under those circumstances repeal would be permissible. It was made permanent by Mr. Robert Harley, later the Earl of Oxford, who is very rightly regarded as the founder of the Tory Party as we now know it. He introduced as a permanent Measure, the Stamp Taxes of which these Stamp Duties we are discussing form part, to pay interest on the founding of the National Debt which would secure the stock of the South Sea Company. In


passing, we ought to pay that tribute to this prototype of Conservative finance. It was, of course, subsequently applied by the party opposite, in the well-known Stamp Act of 1765, to our American Colonies. If I may say so, it does seem to the that we ought again to pay tribute for this outstanding contribution to Anglo-American relations.

Mr. Stanley: Will somebody tell me w hen the hon. Member gets within too years?

Mr. Bing: In 1785, when the matter was discussed—the last occasion on which the House gave serious consideration to these Stamp Duties, Sir E. Astley observed that:
He rose because his tax upon dogs had been alluded to. He owned he should be indeed well pleased to see both dogs and attorneys subject to duty. He coupled them thus together because he thought them both articles of luxury.
Now let me come to the Stamp Act, 1815, because it is there that the taxes obtained their permanent form. There was some discussion on this subject, and since the hon. and gallant Member for Holdnerness (Lieut.-Commander Braithwaite) saw fit to make a reference to the newspapers during the Debate on the new Clause on industrial and provident societies, perhaps you would not think me out of Order—

Mr. Deputy-Speaker (Major Milner): I would think the hon. Member was out of Order. He has already gone extremely wide in his historical references. I ask him now to keep strictly to the proposed new Clause.

Mr. S. Silverman: Surely, Mr. Deputy-Speaker, on an occasion when the House is getting rid of a number of taxes of very long standing, might it not be possible for a little indulgence to be shown, in order to pay tribute to past Members?

Mr. Deputy-Speaker: The hon. Member for Hornchurch (Mr. Bing) will appreciate that I am not altogether out of sympathy with him, but in accordance with my strict duty I must rule that he certainly went too wide, and that he must now confine himself to the particular new Clause before the House.

Mr. Bing: The difficulty I see is that with regard to the tax imposed on news-

papers, to which a contribution was made on the freedom of the Press by the Party opposite—

Mr. Deputy-Speaker: I do not think that that arises. The hon. Member should go on with his own speech.

Mr. Bing: If I may, f should like to read from the original copy of HANSARD the comment made by the Chancellor of the Exchequer on that occasion and perhaps it will show how difficult it is to discover the exact facts of this tax. All HANSARD says is:
After a few words from the Chancellor of the Exchequer which were inaudible in the Gallery, a division took place—For the Amendment, 16; Against it, 53; Majority, 17. The Resolution was then agreed to.
This is unlikely to occur in present circumstances and inevitably whatever comparison may be made between the Chancellor of that time and the Chancellor today at least in this matter the balance will be made in favour of my right hon. Friend. The Chancellor today is heard not only throughout this Chamber but very often outside it. On a recent occasion he did address one or two words to the proprietors of football fields about the passing to their patrons of the full effect of tax reductions. Similarly, I hope the Chancellor will advise that the full effect of this relaxation of taxation is passed on by the learned societies to the affected students

Sir Hugh Lucas-Tooth: I am sorry that the learned Solicitor-General in his opening speech did not deal with the period until this Clause becomes effective. There is an Amendment on the Paper, though I do not know whether it will be called, which raises the question of retrospection, but only in respect of the duty on articles of indenture. As I understand it, the Clause was so drafted that, in fact, the Bill will only go back from the date on which this Finance Bill becomes law, and I would ask the Solicitor-General and the Chancellor of the Exchequer whether they would not consider giving sonic measure of retrospection. There will no doubt be a considerable number of young men and women who have already paid, or will be already due to pay, the amount of this duty between the end of the war and the period when this Clause comes into effect. It seems a little hard that they


should be excluded from this benefit. I think it is probably true to say that with negligible exceptions, no duty has been paid from the end of the war back to somewhere about 1939. That does, therefore, create a very convenient resting place, and if the Government could see their way to extend the effect of this backwards, if not as far as was suggested by the hon. Gentleman the Member for Hornchurch (Mr. Bing), at least to the end of the war it would be a very great advantage to a deserving number of the community.

Mr. Deputy-Speaker: I intend now to call the hon. Member for Nelson and Colne (Mr. S. Silverman). I ought to inform him that his Amendment has been ruled out of Order.

Mr. S. Silverman: I am much obliged to you. I understand that my Amendment could not in any case have been called until this Clause has been read a Second time, but I am grateful for the information in regard to it. I should like now to say a word or two about the reasons which prompted me to put it down in the hope that I might be able to persuade my right hon. Friend to consider it between now and the date when this Bill becomes law. I should like to say first how much we are indebted to my right hon. Friend for the breadth and generosity with which he has carried out the undertaking which he gave on the Committee stage. On that occasion I had down an Amendment limited to the one solitary point of the £80 Stamp Duty on articles of clerkship. I confess that when I put that Amendment down, I was not unaware that a similar case could be made out for a great many other things, but I thought it was perhaps prudent to begin with the case which was most glaringly indefensible, and which was in a sense different from any other tax of the kind in that other taxes are on admission into a profession, while this tax was on an apprentice beginning to qualify for admission at a later stage to that profession. That seemed to me to be a case hopelessly indefensible and that it would be the weakest part of the wall which if once breached might enable me to get other matters of a similar nature taken up. I thank my right hon. Friend for accepting the principle of that Amend-

ment and I ask him to consider that there are other similar cases. I think we are all very grateful now that my right hon. Friend has found it possible to put down this Clause which applies the principle, I think, to all the other cases so far as I know to which the principle does really apply. It is a pleasure to find a thin done, not in a grudging and halting way, but broadly and generously, giving full scope to the principle behind it, and applying that principle wherever it is fair to apply it I think it right to say to my right hon. Friend how much we appreciate that and how grateful we are for it.
Gratitude was once defined as "a lively sense of favours to come." Therefore, put down this Amendment because it seemed to me in two small particulars that the case was still not fully met. If the Amendment that I had put down had been called, and accepted, it would have cost the Chancellor very little, indeed an almost insignificant amount. I can quite appreciate that we cannot make reliefs of taxation of this kind retrospective beyond limits. My Amendment was really a very modest one. I asked my right hon. Friend to make retrospective two classes of case. The first one was this—there is the difficulty which has just been cited about the date on which this is due to come into operation. If my right hon. Friend had happened to think of this first it would presumably have been a Budget Resolution moved on Budget Day. In that case, it would have been law as from that date. My right hon. Friend said when accepting the Amendment in the Committee stage that he was surprised that it had not been moved earlier. Be could have moved it earlier. He could have moved it on Budget Day, and if he had done so it would have been retrospective from then.
Why not make that the date now? That was done in the case of Purchase Tax on various kinds of domestic and electrical appliances. I readily admit that that was purely a purchase tax and not a Revenue tax but it was made retrospective to the beginning of the financial year. It would be very hard indeed to take £80 now from a boy who has paid his Stamp Duty since the very date on which the Chancellor said he was going to let other people off paying. At least, he should make it retrospective to the date


on which he could no longer, as Chancellor of the Exchequer, support this imposition. Surely, having said that in the House of Commons, having committed the Government to putting down a Clause to abolish it, he cannot with a clear conscience accept the £80 from that day onwards, and if anybody has paid it, he ought to give it back. It is not unfair to say that the most equitable date on which to draw the line is Budget Day this year, the beginning of this financial year.
The other case is rather different but, I should have thought, not easy to resist. When people who served in the Forces during the war came out, all of them had gratuities of some kind, and some of them had educational grants. They had to prove a number of things before they received an educational grant. They had to satisfy the appropriate Government Department that they were really embarked upon this career before, but as a result many people received rather modest but useful educational grants. Anyone who received a grant of that kind and decided to enter any other profession except the profession of solicitor, was entitled to use every penny of his grant for his support in the meantime while he qualified himself, and until he was able to earn his living in the profession of his choice. If, however, he was a solicitor, the Government promptly took back out of his educational grant £80.
I am not contending that there ought to be a special privileged class in this community of ex Service men. Almost everybody in this last war belonged to that category in one sense or another, and one cannot make a separate class of them or give them special privileges. They must share, like everybody else, in such benefits as the community is able to distribute on a nondiscriminatory basis, and I am not pleading specially for ex-Service men. If, however, we have a class of ex-Service men to whom we give an educational grant, then we ought not to discriminate among them so as to make the grant £80 less if they choose one profession rather than another. I do not know whether it is the Treasury who ought to give it back or the Ministry of Labour, but somehow or other the money ought to be refunded. The discrimination, which nobody supports, ought not to be applied in this case.

That was the effect of my Amendment had it been called—

Captain Crookshank: There is a flaw in that argument.

Mr. Silverman: —in the first place, to make the remission of the tax effective as from the beginning of the Financial Year, 1947, for everybody, and, secondly, in the case of ex-Service people who have been given an educational grant, then the £80 ought to be returned to such people if they have paid it since the 30th June. 1945.
I do not easily see what objection in principle there is to either of those two claims. I find it difficult also to see what difficulty there is in practice. Stamp Duty is easily detectable. The man has only to produce his articles with the £80 stamp impressed on them to show clearly on what date it was paid. That would cover all the cases in the first class without further inquiry. In the second class, all he has to do is to show the document—there must have been some letter or certificate issued to him by the appropriate Department—showing that he was then in possession of an educational grant.

Mr. Hale: May I suggest that the Law Society has all this information on its files, and could distribute the money equitably to the persons who paid it?

Mr. Silverman: I am obliged to my hon. Friend for his admirable suggestion, and if there were any difficulty, I am sure it could be overcome in that way. Finally, I can quite understand.hat there is nothing the Treasury like less than giving money back which has once been paid to them, and I can understand they will sea all kinds of difficulties in performing the operation. Nevertheless, those difficulties ought to be overcome. I am sure that if my right hon. Friend had let the Department decide whether these remissions should ever be made, the Clause might never have been on the Order Paper at all. It is there now because my right hon. Friend thought that it was right it should be there, and was determined that, where justice could be done, it should be done. I think I have made out the case, and I am sure it is not beyond the ingenuity of my right hon. Friend to find a feasible way of giving effect to it The final argument in its favour, which ought to weigh even with every official in the


Treasury, is that the amount of money involved is so small that they would never know they had lost it.

Mr. Stanley: I want briefly first to thank the right hon. Gentleman for putting this Clause down. At one moment I thought he had the rather novel idea that this should form a sort of treasure hunt and that if, between now and another stage, we had been able to think of the other clues he had in mind, we were to get a prize. However, I am glad to say that he changed that and he has now done what, I agree, is the wise and generous thing; he has covered all the cases which have come to his knowledge, and all of us are grateful to him for that. I thought really it was a little ungenerous of the hon. Member for Horn-church (Mr. Bing) to speak against this Clause.
I would add my plea to that of the hon. Member for Nelson and Colne (Mr. S. Silverman) and that of my hon. Friend the Member for South Hendon (Sir H. Lucas-Tooth) with regard to the date on which this comes into operation. I, like all of us, take what we can get and, indeed, anyone with the Christian name that I bear naturally asks for more. I should like the Chancellor to go as far as the Amendment of the hon. Member for Nelson and Colne would have asked had it been called but, if that is not possible, I would beg him to think seriously about being able to go back, as he has done in other cases in this Finance Bill, either to the date of the Budget Resolution or at least to the date when he made the announcement in this House that he was prepared to accept this Clause. I have a letter here from a constituent who says that he read with great interest and appreciation the statement of the Chancellor because he thought it meant that his son, who was just about to be articled, would be saved £80. To his great disappointment, when he inquired on the 2nd July about this, he was told that his son would still have to pay £80. I am not a solicitor and I do not know whether it is possible to delay the stamping of those articles and, therefore, simply by delaying the matter take advantage of the date included in the Bill. I appeal to the Chancellor to see whether it is not possible at any rate

to antedate this concession to the Budget Resolutions. He has done it in the case of electrical cookers and he has antedated it even further back than that in the case of motor registration fees. It would not establish any terrible precedent and it would be relieving a certain amount of hardship if he could do that.

5.0 p.m.

Mr. Rees-Williams: I would like to thank the Chancellor of the Exchequer for his very generous treatment of this matter. The House will remember that I supported the hon. Member for Nelson and Colne (Mr. S. Silverman) when this remission was first mooted The hon. Member for Nelson and Colne has put up a very powerful argument which has been supported by the right hon. Gentleman the Member for West Bristol (Mr. Stanley), and there is very little more that I need say except with reference to those gentlemen who have been admitted since 5th April and who would also like to have their admission fees of £25 apiece remitted if the Chancellor of the Exchequer would agree. A number of those who have been admitted since that date are ex-Service men. They came out of the Army in 1946, have studied during this period, have passed the final examination and have been admitted. A large number of us have had letters from these people. They have had to spend part of their gratuities in order to pay the £25. It will be a great disappointment if this is not conceded, and I therefore ask the Chancellor to antedate to the 5th April this year the concession which he has so generously made.

Mr. Hollis: I would like to carry the argument of the hon. Member for Nelson and Colne (Mr. S. Silverman) to what I think lie will agree is its logical conclusion. Two points seem to be raised by his arguments. First, the Stamp Duties in general are to be washed out; and, second, solicitors have up to now been in a uniquely unfavourable position, in so far as other people make payments when they become qualified, but solicitors have had to make their payments when they begin to qualify. That being so, the logic of the argument is surely that this concession should not be given merely to ex-Service men or ex-Service women in receipt 01 any educational grant, but that anybody who is in course


of qualifying but has not yet qualified should be allowed to have that amount refunded. The only argument against it might be on the grounds that it would cost too much money I feel that it would not cost a vast amount of money, and I should be grateful if we could be told what would be the cost of the full concession.

Mr. Turner-Samuels: I listened to the speech of the hon. Member for Hornchurch (Mr. Bing) and felt that in giving us so much interesting information about the past history of this matter he rather overlooked the present. We are all very grateful to the Chancellor of the Exchequer for the remission of these taxes. The need for getting rid of them is long overdue. Many efforts have been made in this House—quite a number of them came very near to success—to get rid of these duties and especially the Stamp Duty on the annual certificate which a solicitor has to have in order to entitle him to practise. I referred to the matter of the present for this reason. It is true that we are all very grateful to the Chancellor for these concessions, but hon. Members on all sides of the House share in this victory. The initiation of it came from my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman). With his usual industry and alertness he seized on this point about the articles of clerkship to a solicitor. It was undoubtedly an extravagant sum to ask an articled clerk to pay when one considers that practically every other instrument of apprenticeship required a stamp of 2S. 6d. only.
There was great disparity between the articled clerk to a solicitor and every other case, in which, as I say, the stamp on the instrument of apprenticeship costs 2s. 6d., with the exception of admission to one of the Inns of Court. In the case of a solicitor's articled clerk, £80 had to be paid and in the case of a Bar student £50 had to be paid. Chat is how this question of remitting these duties started. It must also be said that it was due to the persistence of the right hon. and learned Gentleman the Member for the West Derby Division of Liverpool (Sir D. Maxwell Fyfe) that the matter became ventilated in the way it did. That caused the Chancellor to say that there might be what he called "comparable cases" and that if anyone had

put forward a Motion on similar lines in respect of all or any of those cases he would have considered them in the same light. It is perfectly true that in the case of an articled clerk it was an educational tax, just as in the case of admission to one of the Inns of Court it is also an educational tax. Obviously, that is a form of tax which is quite unacceptable in these days.
It was due to that, that some of us approached the Chancellor of the Exchequer on this matter. In the course of those discussions the list for remission expanded. The original idea was that it should apply only to Stamp Duties of an educational character. Then it extended, until now, so far as the legal professions are concerned, it has also swept in all the vocational Stamp Duties. That was the right thing to do because it is quite wrong to select one section of the community, and one section of the professional community, and to impose on them a discriminatory tax of this character. One disparity in tins connection was outstanding, namely, was that whereas a solicitor paid on admission a Stamp Duty of £25, a member of the Bar paid on admission to the degree of barrister £50 and, to keep the variation going, a notary public paid £30. That was a form of disuniforrnity on these various admissions which became absurd.
I think it was due in the first place to the persistent way the right hon. Gentleman the Member for West Bristol (Mr. Stanley) had raised the matter. It was due also—if I may say so modestly—partly to a discussion I had with the Chancellor of the Exchequer that the matter got expanded. I am sure the Chancellor of the Exchequer would agree that I take only partial credit. Following upon that, my hon. Friends also talked to him and—not forgetting the effort made by the right hon. Gentleman the Member for West Bristol—the cumulative effect of that was to impress upon the Chancellor that this was a class of Stamp Duties which ought to be got rid of Thai is much more important than hoary past history about this subject. It is perfectly true that so far as the annual certificate is concerned, that was imposed after the American War of Independence. There seems to have been a competition at that time as to whether a tax should be imposed on retail shops or whether this


particular tax on solicitors should be introduced, and the retail shops won. Since then there have been repeated efforts in this House to get rid of the tax. On ten occasions, I believe, they have nearly succeeded, and today for the first time they have definitely succeeded. I am perfectly certain that every member of the legal profession is deeply grateful to the Chancellor of the Exchequer, whether it be an articled clerk, a student going into one of the Inns of Court, a practising barrister either in England or Scotland, or an advocate or a Writer to the Signet or anyone occupying that position who has felt himself aggrieved because of this discriminatory tax which has been imposed upon him. They will all convey their thanks to the Chancellor of the Exchequer for at last getting rid of this long injustice.

Major Peter Roberts: I should like to stress the plea for ex-Servicemen which has been made by many hon. Members this afternoon. There is one particular point I want to bring to the attention of the Chancellor of the Exchequer in a letter which I have received from the Sheffield and District Law Students' Society. They stress the fact that many of these ex-Servicemen are older persons and have other financial commitments. They are not in the same position as others coming in at the age of 18, and since some of them are married men, possibly with children, it would be a great assistance if the Chancellor could consider something on these lines.

Mr. Dumpleton (St. Albans): I have not the Parliamentary experience of my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) or the legal knowledge of my hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels) so that I do not know how one can support an Amendment which has been ruled out of Order and has not been moved. However, in support of the point made by the hon. Member for Nelson and Colne—with regard to which hon. Members have stated that they have received numbers of letters—I feel that if I cite an example it will strengthen the argument. A young man in a local authority office who, by his competence and skill, had risen to the position of senior clerkship is to be articled to his town clerk. The question of the £80 Stamp Duty is a con-

siderable item to him. He noticed that in February of this year the point was raised in this House by a Question, and that my right hon. Friend the Financial Secretary to the Treasury—as is customary on Questions of this kind—said at that time that no forecast could be made of the Budget and referred the questioner to the Budget. I think that people outside this House may be excused if they are not fully conversant with its procedure, and what happened was that this man waited until Budget Day, noticed that Stamp Duties were referred to but that this particular one was not mentioned, thought that the matter had been finally settled, and paid his Stamp Duty. If this retrospective action can be conceded as has been suggested, this is one only of very many similar cases of hardship which might be rectified.

Mr. Ungoed-Thomas: I wish to make two brief observations concerning Subsection (la) of the new Clause which provides for the admission in England of any person to the degree of barrister-at-law. This is a matter which has exercised the General Council of the Bar for a very considerable period, and I am in a position to say that they very much welcome the initiative which the Chancellor has taken in this matter and are grateful that at last this duty is being repealed. I am afraid that it has, perhaps, come as somewhat of a surprise to my politically benighted fellow-members of the Bar that a Socialist Chancellor of the Exchequer should be so forthcoming and generous, but perhaps it is appreciated all the more on that account.
5.15 p.m.
The second observation I wish to make is an entirely personal one. This remission will have the advantage, perhaps, of enabling rather more poor people to find their way to the Bar than would otherwise have been possible, and that is entirely to the good. But, unfortunately, as I think, people become members of the Bar who never intend to practise there at all, and it is about the only profession of which one can become a member without serving an apprenticeship. As hon. Members know perfectly well, all that has to be done is that a certain number of examinations have to be passed which are certainly below the standards of solicitors' examinations, and a certain number of


dinners have to be eaten—neither operation a very difficult one. The result is that we may now have people coming to the Bar not in order to practise but in search of a comparatively cheap qualification for other purposes. Personally, I do not think that that is desirable and I hope that those who are concerned with these matters will pay some attention to that aspect of this problem.

The Chancellor of the Exchequer (Mr. Dalton): First, I should like to thank hon. Members in various parts of the House for the kind things they have said about the new Clause which my hon. and learned Friend moved on my behalf and which proposes either the complete removal or the reduction to a nominal figure of the series of charges therein set out. It is quite right in principle and, as I said on an earlier occasion, I am rather surprised that it has been so long before this has been done. Of course, one thing always leads to another and when my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) first put down the Amendment, he did not say anything about making it retrospective. These thoughts followed, no doubt in logical sequence, and the more one gives the more one is pressed. That we know, and it is quite legitimate, but just occasionally one has to grow rigid. I am not sure that I need do so this afternoon, but sometimes I must, because otherwise it is such an easy game. You make an original proposal, somebody makes a proposal to improve it, you accept it, and that is not the end of the matter. Afterthoughts of further perfections occur and the process is unending like Achilles and the tortoise. At some stage one must stand.
I think, if I may be allowed to put it quantitatively—I am now on the retrospective proposal—that there is very little in this. I cannot imagine that the cautious person who reads his HANSARD, or the parent who does so, will fail to know that this is in the wind. There will have been very few of them between Budget Day and now—half a dozen in one profession and perhaps three or four in another. I regard it as what the lawyers call de minintis. [Interruption.] If my hon. Friend the Member for Nelson and Colne argues back too hard, I shall perhaps grow rigid, whereas now I am open to be convinced. In my view, as I have said,

I think there is extremely little in it. I ought just to mention to the House that the Bowles Act does not help here. I went into this very carefully, when I wa3 originally intending to make some propositions regarding Stamp Duties in my Budget proposals and found that that Act does not apply to the Stamp Duties. It would not have been possible to do this on the Budget Resolution. We have had the Budget Resolution. It would not have been operative as from the acceptance of the Budget Resolution because the Stamp Act is not covered by the provisions of the Bowles Act. That is why we put in 1st August as the operative date. We thought that would be the date by which we could expect the Finance Bill to have been passed into law.
I cannot accept the proposition that tax remissions shall, more often than not, be made retrospective. That would lead us into a muddle and it would discourage other Chancellors of the Exchequer from making tax reductions in marginal cases. When the balance might easily go one way or the other, a Chancellor of the Exchequer would be inclined to say, "It might be all right, but I shall be expected to make the thing retrospective. That would cost more money. The whole thing is hardly worth the candle. Let's leave it where it is. "That is a warning of a position into which we ought to try not to get. When one does want to re duce a tax, one cannot make it retrospective to such a degree as to give up revenue which has already been netted, particularly if it has been netted in a previous financial year.
Therefore, if I do anything retrospective my action must be regarded as quite exceptional, and I hope the House will take it as being so. My action must not be made too retrospective. The reason there has been a certain amount of deliberate delay in making observations on the matter is that consultations have been taking place with my expert advisers as to how, at this late hour, something of this sort could be done. It is a very late hour. The Finance Bill is very nearly out of our hands. The only way in which the thing could be done would be for me to propose a manuscript Amendment. I am prepared to do that, if the House is willing to carry the concession back to Budget day. It must be


as simple; that. I cannot complicate it by considering classes of beneficiaries who may have paid something before Budget day, even if they be ex-Service men. I cannot be pushed indefinitely far back. That would make the whole thing too complicated. It may be difficult to get the return back from the Law Society —although no doubt they have their records. I am prepared, in the light of the proposals which have been made in the discussion, to make the concession retrospective to Budget day, or to a date just before Budget day. I am advised that can be done, if it is in Order for me to do so, by moving at the right moment a manuscript Amendment, which I have in my hand. I ask your guidance, Mr. Deputy-Speaker, when it would he in order for me to do so.

Clause read a Second time

Mr. Deputy-Speaker: With regard to the question of a manuscript Amendment, I ought to tell the House that Mr. Speaker is very chary about accepting manuscript Amendments at short notice. In this case, however, I am willing to yield to what I gather is the general wish of the House, and I am prepared, in the circumstances, to accept the proposed manuscript Amendment. A second question arises, which I should mention. The proposal is to refund certain money. If those moneys were in the hands of the Treasury it would require a Resolution in order to authorise the payment out of that money. If, however, the Chancellor of the Exchequer assures me, as I understand is the case, that the moneys are now with the Inland Revenue and have not yet reached the Exchequer, it would be in Order for him to move the manuscript Amendment.

Mr. Dalton: I beg to move, as an Amendment to the proposed Clause, at the end, to add:
(4) This Section shall be deemed to have come into operation on the sixth day of April nineteen hundred and forty seven and where it is shown to the satisfaction of the Corninissioners that any Stamp Duty has on or after that date become payable and been paid at the rates in force apart from the provisions of this Section, the Commissioners shall repay to the person who paid that duty the difference between the duty which was paid and the duty (if any) payable by virtue of this Section.

I am very much obliged to you, Mr. Deputy-Speaker, for what you have ruled. I think it is the commonsense and practical way of dealing with this matter. The fact is, as you have stated, that moneys do not reach the Treasury at quite such short intervals as this, and that the moneys in question will still be with the Commissioners, I have no doubt. My advisers, working at high pressure, have produced the form of words which I have moved. They know the tricks. I hope I may be allowed to pay my tribute to those Benches which are not part of the House, where persons sit ready to assist Ministers at such short notice.

Mr. Assheton: I am sure that the whole House is grateful to the Chancellor of the Exchequer for the extremely accommodating way in which he has dealt with the appeal made to him from all sides of the House. As has been stated earlier, this is a matter which has engaged the attention of Members on both sides. The Chancellor has met in the most admirable and speedy way the difficulty which has been pointed out to him. I hope that the terms of the Amendment will do the trick eventually. If, on further consideration, it is not sufficient, there will he an opportunity in another place for any rectificatioc to be made.
I was going to put to the Chancellor of the Exchequer another point when he go up to move the Amendment. I was disappointed that he did not deal with the question of the duty of Lao for the Lambeth Degrees. I am not asking for anything to be done about it this year, but I am asking him to consider the matter before next year and to see whether that particular case—a very small one, falling upon a very small class of the community, clergymen—can be considered

Mr. S. Silverman: I wish to thank my right hon. Friend for the way in, which he has responded to the arguments put to him from all sides of the House. I wish also to pay a tribute to the officials who have enabled him to translate his goodwill into the Amendment which he has loved. We all appreciate very much indeed how difficult it is for the Chancellor to make a concession. In all the circumstances, I thank him very much indeed for having met the view of the House.

Amendment to the proposed Clause agreed to.

Clause, as amended, added to the Bill.

NEW CLAUSE.—(Exemption of transfers of stock guaranteed by Treasury.

(1) Where the payment of principal and interest on any stock to which this Section applies is guaranteed by the Treasury, transfers of the stock shall be exempt from all stamp duties.

(2) This Section applies to all stock issued by any of the following bodies, that is to say:
The British Overseas Airways Corporation;
The North of Scotland Hydro-Electric Board;
The British European Airways Corporation; and
The British South American Airways Corporation;
and to any other stock to which it may be applied by direction of the Treasury, being stock issued by a body corporate constituted for the purposes of any scheme for the carrying on of any industry or part of an industry, Or of any undertaking, under national ownership or control which may be embodied in any Act passed after the beginning of the present Session.—[Mr. Glenvil Hall.]

Brought up, and read the First time.

5.30 p.m.

Mr. Glenvil Hall: I beg to move, "That the Clause be read a Second time."
This is a straightforward Clause in simple language, unlike other Clauses we have had to consider. Its object is to exempt from Stamp Duty the transfer of certain stocks which are issued by corporations carrying on nationalised undertakings and stocks which are guaranteed by the Treasury. As the House knows, all transfers of Government stocks are exempt from Stamp Duty under the provisions of the Stamp Act. The stocks covered here and issued by many of the nationalised undertakings are not, strictly speaking, Government stocks, although they are guaranteed by the Government. Therefore Stamp Duty would have to be paid on that. The effect would be that whereas Government stocks reflect in their price the fact that no Government duty is chargeable on transfers, there would be this type of stocks, which are also in a sense Government stock in that they carry with them a Treasury guarantee at a lower price because they would be subject to tax. It is, therefore, proposed in

this new Clause to put them on the same footing as Government stocks so far as Stamp Duties are concerned.
It will be noticed that in Subsection (2) of the new Clause public bodies are named. B.O.A.C. has made an issue, but so far it has not been in the strict sense a public issue. I understand it has been taken up by the National Debt Commissioners. The North of Scotland Hydro-Electric Board are in process of making an issue. Those are the only two issues which have so far been made by the bodies listed here. National Coal Board stock will, of course, be Government stock. The Central Electricity Authority and British Transport stock will, subject to conditions laid down here, by direction of the Treasury, be able to take advantage of this Clause, if it is accepted.

Mr. Assheton: Does the right hon. Gentleman think that this Clause will save the Exchequer money, or cost the Exchequer money?

Mr. Glenvil Hall: the Exchequer hardly comes into it. The only people who can come into it are the public, if the transferee had to pay the duty, or the corporation, as many corporations compound for Stamp Duty. I am told that in the case of the new Transport Board, the cost of Stamp Duty for the railway compensation stock alone would be in the neighbourhood of £3¼8 million. So it will certainly save these new nationalised boards money, but not, of course, save the Government money directly.

Mr. Assheton: Although there may be a loss of Stamp Duty to the Government over a considerable period of years, as long as transactions take place in these stocks, none the less the Government must have reason for making the proposal. Is the reason that the stock which will be issued to the various holders of railway stocks and so on will be issued one point dearer, as it were, as Stamp Duty will not be chargeable? If that is the case, I can see the point of the Clause, and welcome it.

Mr. Dalton: I think that is correct. I think the absence of Stamp Duty would have that effect.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Allowances for obsolescence of buildings.)

(1) On and after the sixth day of April, nineteen hundred and forty-seven, there shall be made to any person who incurs, or has prior to the said day incurred, capital expenditure on the acquisition or construction of a building used for residential, commercial or other purposes, not being an industrial building or structure within the meaning of the Income Tax Act, Act, 1945, the allowance hereinafter mentioned.

(2) In the case of any building to which the foregoing Subsection applies an allowance shall be made during every year up to and including in the case of a residential building the ninety-ninth year and in the case of any other building to which this Section applies the seventy-fifth year, in each case from the date of the construction of the building, equal to one ninety-ninth or one seventy-fifth part as the case may be, of the cost of the building excluding therefrom the value attributable to the site thereof. In the event of the relevant interest in a building being sold before the building is used, Section five of the Income Tax Act, 1945, shall apply to buildings to which the foregoing Subsection applies as it does to industrial buildings.

(3) The said allowance shall be made during the unexpired term of the lease under which the land is held or during such period as the said building is in the ownership of the person by whom the said expenditure was incurred whichever is the shorter.—[Sir J. Mellor.]

Brought up, and read the First time.

Sir John Mellor: I beg to move, "That the Clause be read a Second time."
The purpose of this Clause is to provide obsolescence allowances for buildings generally, so that provision can be made for their replacement out of untaxed income. I ought to mention at once that I have some private interest in this matter. It has been a conspicuous omission in our Income Tax law that no allowance whatever has been permitted for the depreciation of buildings, except in the case of industrial buildings. That, of course, is quite apart altogether from the ordinary allowances for repairs, which is an entirely different matter. All buildings must be regarded as wasting assets to a greater or lesser degree. The Income Tax Act, 1945, made provision for obsolescence allowances in the case of industrial buildings, and the purpose of this Clause is, so far as possible, to adapt the provisions of that Act to buildings generally.
The new Clause does not seek to apply the initial allowances, which were a feature of the Act of 1945. But it seeks

to apply in a similar way for other buildings the annual allowances which were provided by that Act for industrial buildings. I recognise that the terms of this Clause are inevitably incomplete. Unfortunately, owing to the Rules of Order, it would not have been permissible to include provision for balancing charges which were involved in the Act of 1945. The House will remember that that Act involved a system of balancing allowances, and balancing charges. As it would be out of Order to introduce something which imposes a charge, the terms of this Clause are necessarily incomplete. The main idea of the Income Tax Act, 1945, in regard to industrial buildings was to enable them to be written off out of untaxed income over a period of 45 years. The site value, of course, does not enter into the picture. In this Clause it is proposed that provision should be made so that commercial buildings can be written off over a period of 75 years, and residential buildings over a period of 99 years.
I must confess that in many respects the terms of the Clause cannot be regarded as satisfactory. I am seeking to raise a very important principle. The Clause is not satisfactory in so far as its provisions apply to the amortisation of leasehold interests, because obviously the rate of amortisation of leasehold interests should be related to the term of the lease, and not to the life of the building. What I am seeking to raise today is the vital principle that some allowance should be made for the obsolescence or depreciation of all buildings. If it appears convenient to extend the principle of the Income Tax Act, 1945, I shall most cordially welcome it. In the discussions on the Income Tax Bill in 1945, it was made clear from the Government Benches that obsolescence allowances for industrial buildings was as far as the Government could then go. It is now time that a further advance was made, and I am encouraged in that view by a document entitled the "Report of the Central Advisory Committee on Estate Development and Management." In February last, a copy of that report was sent to all local authorities by the Ministry of Town and Country Planning. Therefore, I assume that its terms are commended by the Government. In that report I find some interesting passage which have a bearing upon this issue. It is stated, on page 18, in paragraph 65:


The need for periodic redevelopment renders it very desirable that lessees should ' write off ' their buildings over the period of their estimated useful life. … We recommend this practice and suggest that local authorities should advise its adoption by all lessees.
If that is a right idea, why should the individuals concerned be expected to do that out of taxed income? I submit that it is a thoroughly desirable process that income should be set aside sufficiently to replace a wasting asset in due course. The Chancellor is continually urging upon this House the importance of ploughing back income into capital. I agree with him, and it is one way of preventing a further extension of the inflation which we already have. The Royal Commission on Income Tax, which reported in 1918, offered little encouragement. It appeared to take a stand against the amortisation of any wasting assets. There was at that time an allowance for mills and factories, but I must admit that the Royal Commission reported against any extension of such allowances. Since 1918 things have changed a good deal. First of all, in 1918, the standard rate of Income Tax was 6s. in the Again, since 1918, the position of landlords has become less favourable for one reason and another. At the present time they have to pay Income Tax upon the actual rent they receive, whereas in 1918 they were in the more favourable position of paying Income Tax upon an assessment which was closely associated with the rating assessment. Having regard to the terms of the report from which I have just been reading, and which I presume has the blessing of the Government, I think we can say that the time has arrived when the matter should be considered.
With regard to the appropriate period over which commercial and residential buildings respectively should be written off, this report again throws light upon the subject. I recognise that there must be considerable variations in the probable life of buildings, and that it is difficult to lay down any rule. Indeed, it might be desirable that the allowance should he adjusted according to the probable life of a particular building, but I will not go into that question. In that report, I read:
… the length of lease of building sites in a central area should be governed by the likely period of useful life of the proposed development as a whole…With some types of

property this object may be achieved by adopting the common practice of granting ground leases for 99 years. Under modern conditions, however, commercial development —and particularly shops in central areas—may become obsolete within a substantially shorter period. the time when the general run of buildings in a central area will become obsolete will almost certainly be reached considerably before the end of 99 years
We therefore recommend that, in the interest of good estate management, the general practice in regard to commercial and industrial buildings in central areas should be to grant ground leases for an average term of 75 years.
5.45 p.m.
It will be remembered that under the Income Tax Act, 1945, provision was made to write off industrial buildings in 45 years. Therefore, I do not think that this Clause is being over-ambitious in asking that commercial buildings should be written off over 75 years and residential buildings over 99 years. I hope that we shall have a full reply on the question of principle. I recognise that this Clause would require a good deal of adjustment and adaptation before it could satisfactorily be incorporated in the Statute, but I hope that the principle of this matter will be fully discussed this afternoon.

Mr. Gammans: I beg to second the Motion.
I need hardly remind the Chancellor that what we are asking for in this new Clause is not a new principle, nor is it the first time that this question has been raised in the House. The principle is, of course, that there should be an allowance for any wasting asset. That principle has already been accepted in a limited number of cases. It has been accepted in the case of industrial buildings, and I think also in the case of patents. Is there any valid reason why an allowance should not also be made in the case of commercial and residential property? In other words, where there is any clearly defined wasting asset, why should not the same principle be applied, in particular, as my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor) has just said, with regard to leaseholds? I presume that the Chancellor would agree that a leasehold is, in fact, a wasting asset. I hope that he will not argue that the price which is paid for a leasehold takes that fact into account.

Mr. Benson: Why not?

Mr. Gammans: that would be valid If taxation were to remain at a static figure, but taxation varies from time to time.

Mr. Rees-Williams: In respect of whom is the leasehold a wasting asset? The landlord holds a valuable and iniquitous asset.

Mr. Gammans: I do not want to argue on that matter. The fact is that the Chancellor is very keen, I think quite rightly, on profits being ploughed back into industry. Here is a case where, as my hon. Friend has pointed out, there is an opportunity for that to be done.
This is not the first time that this matter has been brought up. I would refer the Chancellor to what was said by his predecessor in 1944 He said:
The position of leaseholds is much more complicated and while I would like to propose outright the application of a similar principle to that which I have outlined for patent rights, I must say no more than that this subject will be further considered.
The Treasury has now had three years to consider it.

Mr. J. Hudson: And we have had a General Election.

Mr. Gammans: the Chancellor has taken great pride in the fact that he has removed anomalies with regard to duties in other directions. I suggest to him that this is an opportunity for removing yet another anomaly, and an opportunity to be quite logical and apply to the whole range of buildings a principle which has already been accepted.

The Solicitor-General: I am sorry to say that we feel that we cannot accept this new Clause for a variety of reasons. First, I will deal with the technical reasons. It would be quite wrong of me to invite the House to reject a proposal simply because it was technically incomplete, having the advantage of the assistance I have from experts. This new Clause, as the hon. Member for Sutton Coldfield (Sir J. Mellor) said, as a matter of drafting has a radical defect which he himself indicated. It has no provision for any balancing charge. If it had, no doubt it would have been ruled out of Order because it would have imposed an additional charge. Without a balancing charge provision this would simply open the door to the widest

possible evasion. People could sell oft an asset from one purchaser to another at increasing prices and, by so doing, procure a grant of gradually growing allowances. Therefore, as a pure matter of drafting, it has a radical and not a technical defect. It has a defect which cannot be cured within the scope of this Debate.
However, in inviting the House to reject the Clause I would not stand upon that, because the objection which I want to raise is really a fundamental objection of principle. The cost of the hon. Gentleman's proposal, though it is difficult to estimate, would be in the region of X20 million. In order to justify a loss of revenue of that sort it would be necessary to make out an extremely strong compelling case. I submit to the House that whatever can be said and whatever has been said in favour of this suggestion, falls very far short of any such compelling case. Reference has been made to the Income Tax Act of 1945. The whole object of this new Clause, as was indicated both by the mover and seconder, is really to assimilate the provisions of the Inca Tax Act, 1945, virtually to all buildings. I gathered that the hon. Member for Hornsey (Mr. Gammans) would have extended the principle even wider, to cover all wasting assets. What the cost of such a proposal would have been, I simply do not know. No doubt, it would be very much in excess of Lai million. When the object of the passing of the Income Tax Act of 1945 is considered, I feel that it cannot possibly be said that the time has arrived for any radical departure such as is now proposed from the principles upon which it was based. I would remind the House of what the then Chancellor of the Exchequer said on the Second Reading of the Income Tax Act, 1945. What he said then was:
Let me, at this stage, say quite frankly that I know there will be some disappointment that the new allowances for buildings are to be confined in general to buildings used in productive industry and that, for example, offices and hotels are excluded; but I made it quite clear in my Budget speech of last year that my proposals would be deliberately framed in this way, in order to benefit productive and creative industry. The reasons that have led me to make this distinction will, f think, commend themselves to the House. I propose to the House that we should, as an act of conscious policy, deliberately weight the scales in favour of those forms of capital investment which are most necessary to the industrial strength of the community. It is productive or creative industry that produces


in the main industrial employment and is the foundation of our national prosperity."—[OFFICIAL REPORT, 14th March, 1945; Vol. 409, c. 258–9.]
I submit to the House that every word of what was said then, applies with equal force now. To bring about a complete departure from that principle is what is now proposed. The new Clause would include all commercial and private buildings, and all private residences, and the hon. Member for Hornsey would include all wasting assets, I suppose of any kind. The right hon. Gentleman in 1945 said he would like to consider the matter further, but as events have turned out since then, obviously the case for this sort of relaxation on the very generous scale on which it is provided by the Income Tax Act, 1945, must be limited to those things which come high in the order of priority from the point of view of national necessity and usefulness in conducing to national prosperity. In the Finance Bill Debates in the autumn of 1945 limited proposals were made, and my right hon. Friend found himself not in a position to accept even those limited proposals which related to blacksmiths' shops and hotels. What is now proposed is not to make even any limited proposal for an innovation on the principles of the Act but to sweep them away wholesale. I have indicated the policy upon which that Act was passed. I submit that there is no reason now to depart from that very clear cut and well justified policy. I hope in view of the reasons I have given that the House will agree that no case has been made out for incurring an expenditure which can only be incurred to satisfy a very urgent public need.

Mr. Gammons: Do I understand from what the Solicitor-General has just said that he is not contesting the principle but that, in view of the fact that he gave the House the figures of the loss of revenue which would occur, it is on a matter of finance rather than principle that he cannot accept the new Clause?

The Solicitor-General: I thought I made it clear that I was not opposing this on any technical ground but solely on the question of principle.

Lieut.-Colonel Dower: The Solicitor-General does not accept the case although he admits this to be a wasting asset?

The Solicitor-General: It is too wide.

Mr. Assheton: I think the House should be very grateful to my hon. Friend the Member for Sutton Coldfield (Sir. J. Mellor) for raising this matter and also to my hon. Friend the Member for Hornsey (Mr. Gammans). I was not at all surprised at the reply which we received from the hon. and learned Solicitor-General. I thought that there was a great deal of reason in it. I have always thought that this was a matter which must be dealt with at some time in the future. I quite appreciate that the enormous cost which would be imposed upon the Revenue by making this concession now is a difficulty which we cannot be surprised that the Chancellor is not prepared to overcome this year. I am not at all sure that it is quite so low in the order of priority from the point of view of the community as a whole as the hon. and learned Solicitor-General suggested. We have suffered in this country for a long time from buildings which have become much too old. There are other countries which have more modern systems of taxation where there is much more encouragement to pull down and rebuild buildings when they have ceased to be modern and convenient. If one walks about London one will see a large number of very old fashioned flats and offices and hotels which, had there been reasonable allowances for obsolescence, would by now have been renewed. I think that would be very much in the public interest.
6.0 p.m.
The Victorians, who were a very great people, did not understand obsolescence. They understood depreciation, but they did not understand obsolescence, because they built in such very substantial style that they could not imagine that it would ever come to an end. Nor, in fact, have many of their buildings come to an end; they are still there, almost too much so. It did not occur to the Victorians that there might come, a time when their buildings might be out of date, although structurally very strong and able to stand for many years to come.
The point which the hon. Baronet has made is a good one. It is only right that there should be an allowance for obsolescence in relation to buildings, whether hotels, offices or flats, just as much as in the case of factories dealt with under a


priority by the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) in the Finance Act of 1945. I am very glad that the learned Solicitor-General has not opposed this except on the grounds of cost. He told us that he does not think it has a high priority, and that the Chancellor of the Exchequer cannot be expected to introduce it this year. I hope the Chancellor, after listening to what has been said on both sides of the House, will think about this matter before another year, and that he will see, when allocating his priorities on some future occasion, whether this cannot have a higher place than the Solicitor-General indicated. I suggest that this is something which will benefit all classes of the community and will enable this country to keep up its reputation.

Lieut.-Colonel Dower: I would like it to go on record that the case of a leaseholder is the case of a landlord in nearly every case, because he has the lease of premises for a certain number of years, and any benefit which came about as a result of any future concession would, in the majority of cases, go to the actual occupiers of the premises concerned.

Sir J. Mellor: I do not feel that we have had a satisfactory answer, but I do not desire to take the matter to a Division in view of the fact that the terms of the new Clause could not really be operated. I would therefore beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Changes in classes of goods or in rate for purposes of purchase tax.)

Where by any provision of this or any subsequent Act any change is made in the classes of goods which are chargeable goods or in the rate at which tax is chargeable in respect of goods of any class,

(a) any person is the owner of goods coming within that class for the purpose of resale and the purchase price paid by him for those goods includes tax or includes tax at the rate chargeable prior to the date of such change, he shall be entitled to declare to the seller to him of those goods the quantity of them belonging to him at that date and the amount of the tax included in such purchase which would not have been included if he had purchased them after the date of such change;
(b) if the seller is a registered wholesaler or manufacturer he shall give a rebate to the

claimant equal to such amount of tax on proof to his satisfaction of the amount of the purchase and of the tax included in the purchase, and he shall be entitled to claim from the Commissioners an amount equal to such rebate given to the claimant and the claim shall be satisfied by the Commissioners either by repayment or by deduction from tax otherwise due but not yet paid over to the Commissioners by such registered person;
(c) if the seller who received a claim from the owner of the goods under paragraph (a) of this Subsection is not a registered person he may, on proof of the amount of the purchase and of the tax, claim from the seller to him of the goods an equal amount of tax and so on for each successive sale up to the first registered person in a series of sales of those goods;
(d) the first registered person shall have the duties and rights mentioned in paragraph (b) of this Subsection and the claimant from him shall be obliged out of the moneys received by him to satisfy claims made upon him and so on for each successive sale of those goods down to the owner of the goods on the date when the change mentioned in paragraph (a) is effective.—[Mr. Peaks.]

Brought up and read the First time.

Mr. Osbert Peake: I beg to move, "That the Clause be read a Second time."
This new Clause is similar to those which were put down to two previous Finance Bills, and the matter was further discussed on the Third Reading of the Finance Bill a year ago. It is designed to meet the undoubted and admitted hardship which falls upon retail traders when Purchase Tax is either reduced or abolished upon a particular class of article. When that occurs, the retailer has to reduce his prices to the public forthwith, although he has stocks upon his shelves of the articles concerned on which Purchase Tax has been paid. I think that this hardship is generally recognised, and, in fact, it has been, by implication, admitted by the Board of Customs and Excise, who advise the right hon. Gentleman upon these questions, because, on the Third Reading of the Finance Bill a year ago, the Financial Secretary—I think it was—in winding up the Debate said that this matter would be considered further to see whether any means could be found of meeting the hardship imposed upon the retail trader.
Soon after that date, I understand, discussions began between the National Chamber of Trade, on the one hand, and officials of the Board of Customs and Excise upon the other. These discussions went on all through the winter and various


schemes were examined by which this hardship might he met. Finally, on 6th April, a few days before the right hon. Gentleman introduced his Budget, the National Chamber of Trade received a letter from the Board of Customs and Excise saying that it was impossible to devise a means of meeting the case which had been put forward. I think, therefore, that the fact that these discussions went on for many months, and that every effort was made to find a means of dealing with the position, shows that the hardship, at any rate, is admitted.
This new Clause is put down in order to get a statement from the Chancellor as to how these negotiations went and why they failed, but one new factor of great importance has emerged since the end of the discussions between the interested parties. On 15th April this year, by Ways and Means Resolution, increased Purchase Tax was imposed upon a wide variety of articles which consume gas and electricity. The Chancellor put up to 66 per cent. the Purchase Tax upon a wide variety of domestic appliances. When we came to the Committee stage of this Bill, these duties, which had been imposed on 15th April, were in many cases, taken off again. The electric kettle is a case in point. Polly put the kettle on, and Suky took it off again.
The Chancellor, in announcing that the tax was coming off these domestic appliances, said that he would devise a scheme to enable the purchaser to recover the excess price which he had paid through the increase of the Purchase Tax as from 15t11 April, and the House has, in fact, accepted on Report an ingenious new Clause to enable anybody who purchased an electric kettle after 15th April and paid the increased Purchase Tax upon it to obtain from the retailer concerned a rebate equivalent to the increase in the Purchase Tax. It does seem extremely strange to me, that if it is possible to devise a scheme whereby a purchaser of an electrical or gas appliance who has paid the additional sum owing to an increase in the Tax can, at the present time, or as soon as the Finance Bill has become law, obtain a rebate equivalent to the excess tax paid, the Chancellor's advisers have been unable to devise a precisely similar scheme as between retailers and manufacturers.
I, therefore, want to get from the Chancellor, if I can, some explanation of

this, to me, astonishing discrepancy, and to say that this new Clause would meet a case of undoubted hardship, and that we are very surprised that, after such a prolonged examination, the Government have been unable to meet the case put forward.

Mr. Dalton: This is not new, We have discussed this subject not only, I think, last year, but on previous occasions, and every effort was made, and with all good will, to find a practicable solution. I regret to say that all these efforts have failed, and I will seek to give the reasons why. There have been long discussions as were promised when the Finance Bill last year was being considered, and I gave a promise, or I think my right hon. Friend gave it on my behalf, that we would enter into the most full and frank considerations with the National Chamber of Trade, as speaking for a large number of those concerned, as to how we could perhaps safeguard the interests of such traders as, at any rate, for a short period—and I emphasise that phrase—were out of pocket by reason of the reduction of tax, and, at the same time, safeguard the public revenues.
I repeat that the discussions went on for some time, as the right hon. Gentle man says. I do not want to commit the National Chamber of Trade to any particular opinion on the details of the matter. They have been very co operative, as they always were. In ancient days, I belonged to their organisation. The late Mr. Howling was always co-operative and helpful, and his successor, I am sure, has been carrying on that same tradition. I do not know exactly how far they would agree with what I am going to say, but I think they would agree with that part of what I am going to say about the difficulty. The views to which my advisers came, and which I accept, is that it is practically impossible to check what stocks of the goods concerned, on which Purchase Tax had been reduced, many thousands of retailers might have at the date of the tax reduction. It is that which we have to ascertain if this thing is to be workable, and it was that, in particular, which we found extremely difficult.
In addition to that, asuming that we could determine these facts about stocks, and could check them up and be reasonably assured that they were accurate in


this vast number of cases, there was no effective means of ensuring that the various retailers concerned would at once mark down their prices and so pass on the benefit to the public. In a certain limited field relating to proprietary articles, we could be sure, but, in the wider field, there was no way of being sure that the public would be given the benefit. I frankly say that I would like to get a solution of this problem, but it must be a solution which also safeguards the public revenue. The difficulty, as I see it, is that we might adopt a scheme which, on the face of it, looks well enough, but which might, in fact, mean that a good deal of public money, which was not designed to go there, would remain in the hands of a certain number of the traders concerned.
I asked for reports, and I would like to have found a way through the difficulty. I frankly confess to the House that I have not succeeded, and the advice which was tendered to me, and which I 2ccept and for which, of course, I take full responsibility, was that no workable scheme of rebates could be devised which would be equally fair to the trader and to the revenue. I think it is worth while saying again that it is easy to exaggerate the grievance from which the retailers suffer. After all, what has happened is that, on some of the things they sell, the tax has been reduced or remitted. It is only on those things that it is to their disadvantage. Under the law, traders are quite free to pass on the tax which they have borne on their tax paid stocks, even if they are subject to controls operated by the Board of Trade or any other Department. When a price control is operating, there is no obligation to lower the price of the goods on which tax has already been paid. Tax paid stocks may continue to carry the pre-tax remission price, and, therefore, there is no reason why they should pass it on prematurely to the consumer as a matter of law, although, of course, competition may make it better for them to do so.
Very soon they pass from a relatively short period, in which they may lose something on their tax paid stock, to a period where they will get the benefit of the reduction. Therefore it is quite possible to put this grievance a good deal higher than it should stand. I think that

it I were to say to traders generally, "I am so much impressed with this difficulty that I will never reduce the Purchase Tax on anything again," I do not think the Chamber of Trade would think that was reasonable, and quite rightly so. It is to the advantage of traders that Purchase Tax should come down, but, in the course of its coming down, there is a short-term inconvenience which, I am sorry to say, we have found no means of overcoming.
It has been said that we have managed to do something which looks not unlike this with regard to appliances of different kinds. That is quite true. In a previous discussion, I pointed out how cautious one must be in doing good, because if one does something in a limited field, one is asked to do what looks like the same thing in a much wider field, where the case is really not the same. In the case of electric cookers, and so on, there is no question of refunding any public money, because the tax will never have been due, it having been remitted on those articles. Therefore, due to the change which we subsequently made, there is no question of any public money being endangered. No public money will have been collected by reason of the increased tax. The only question is, Who will get the advantage of the subsequent remission? There is no public money involved, because we are refunding as from the date when the tax was instituted,
6.15 p.m.
In the second place, it is comparatively easy, in this limited field, for the wholesaler to refund to his customer any monies collected by way of tax, because the whole amount so collected will be returned; there is no question of splitting it up. Finally, and this is the most important argument of all, there is no question of our having to get declarations as to what were retailers' stocks on some particular day, which is what has really proved to be the great stumbling block in the other case. We do not need to ensure the marking down of stocks; that is not necessary. Those were the two rocks on which we struck when we were discussing with the trade how the matter could be dealt with more generally.
This is, of course, a relatively limited deal. The number of cookers on which the tax was collected at the higher rate is small, because it is known that, when the tax was raised, most would-be pur-


chasers thought again, and the amount of trade done in these articles bearing the higher tax was very small. My submission is that we cannot, in tact, do in the wider field what we have already done in the narrower field with regard to electrical and gas appliances. Therefore, I feel that I cannot accept either the new Clause as it stands, or the idea behind it, because they would, in fact, cause a considerable leakage of revenue, while not being, I think, quite effective even for the purpose which the right hon. Gentleman has in mind.

Sir Peter Bennett: I hope that the Chancellor of the Exchequer has not said his last word on this matter, because I am quite certain that his ingenious mind, and the minds of his advisers, will be able to find a solution to this problem when the day comes on which it has to be faced. The Chancellor has been speaking as though the sellers' market is going on for ever. It will not go on for ever. I believe the day will come when we shall have to sell our goods in order to keep the people in work. We shall have to face a totally different set of conditions when that time comes. The Chancellor's remarks have referred almost entirely to what are known as rapidly moving consumer goods. What about the semi-durable consumer goods which last a long time and which are very heavily taxed? The Chancellor has recently increased the tax on motor cars from 33⅓ per cent. to 66⅔ per cent., and the tax runs into many hundreds of pounds. Supposing the day comes when we shall be trying to sell our goods. Let the Chancellor remember that circumstances change very rapidly. I can remember the 1919 motor car show when we could not get a motor car for love or money, and the 1920 motor car show when we could not give motor cars away. The circumstances changed in a year. The only way in which the industry got moving was when Lord Nuffield took his cars up to the Edinburgh show, took some hundreds of pounds off the price and found a market that would buy them.
What will happen when that day arrives and the Chancellor of the Exchequer is forced to remove the Purchase Tax in order to keep the people at work? I am certain he will have to do it. He will not like to see notices in the factories

saying. We can and work for you it the Purchase Tax is removed. What chance will there be for people to stock up goods when hundreds of pounds have to go in Purchase Tax? Some scheme must be worked out. We may be a long way from the day when that will happen, but I am certain it will come. I hope, therefore, that the Chancellor and his advisers will not say, "We have finished with the job; file the document and put it away," because in due course the problem will be an urgent and a real one. The Chancellor and those clever people who advise him, should get on with the job and prepare for that day. We have had enough shocks and we do not want any more.

Colonel Crosthwaite-Eyre: As I understood the Chancellor's argument, it dealt with two points; first, the difficulty of ascertaining stocks, and, second, the difficulty of ensuring that the stocks would be marked down and the benefit passed on to the public. If I may take the second argument first, it seemed to me to be.a contradiction, because half way through his speech he made much of the point that although the trader paid Purchase Tax, he need not bring his prices down, despite the fact that he may be subject to regulation under the Board of tirade. But, as my hon. Friend the Member for Edgbaston (Sir P. Bennett) has said, with competition one would be bound to bring the prices down.

Mr. Dalton: It is part of the traders case that they want at once to reduce the prices, and it is in order to bring about a scheme of this sort that we have had these discussions. I have said that legally they were not compelled to reduce the prices, but in fact, the whole of hese discussions proceeded with the object of reducing the prices as soon as possible, whatever the legal position with regard to prices may be.

Colonel Crosthwaite-Eyre: I am obliged to the right hon. Gentleman. That seems to me to emphasise the point I was trying to make. The Chancellor said that he could not ignore the fact that stocks would be marked down. I think he said that prices would be bound to be marked down. Not only because of competition, but also because the sellers' market will be finished, no trader will be able to sell the goods unless he sells them at a competitive price. Therefore, I think that part


of his argument is open to a good deal of criticism.
As to the other part of the Chancellor's argument, with regard to the difficulty of ascertaining stocks, as far as I can make out, his point was that he did not want traders to send in affidavits or declarations. I cannot see the reason for that. The average trader is continually sending in declarations to many departments, particularly the Board of Trade. In this case, why should he not be permitted to send in one further declaration which would be helpful? It would be open to the Government to provide penalties when any declarations were broken, and I am certain that the Board of Trade and the Treasury between them would soon discover when a trader had done so. In this type of case, particularly in the case of traders selling many small lines, these variations in Purchase Tax are a great hardship. A trader may be selling a small item at 2d. or 3d. each, and if they are suddenly subject to 66⅔ per cent. Purchase Tax the whole of the line becomes unsaleable. That is a great financial burden on the small shopkeeper. Therefore, the Chancellor's arguments do not carry much weight when they are investigated. In the first place, it is essential for the trader to mark down his prices, and in the second place, I can see no reason why the trader should not be enabled to set off his loss.

Mr. Stanley: I should explain why we shall find it necessary to divide on this Motion. We recognise not only that the Chancellor has today given us a courteous and a not unsympathetic answer, but that, no doubt, his officials in the Treasury worked sincerely for a considerable length of time to find a satisfactory answer to an admittedly difficult problem. We were extremely disappointed not only to hear that their efforts had failed, but also to gather the impression that the attempt had now been abandoned and

that we were to settle down complacently to bear this admitted grievance, solely on the grounds that we are not able to find a remedy for it.

The Chancellor may be right when he says that in the existing circumstances, where a lowering of the Purchase Tax would be small in comparison with its total volume, this grievance is not, in total quantity, a very heavy one. But has been pointed out, the position may change very quickly. It may become desirable, and it may even become essential, to make large reductions in the Purchase Tax, with little notice. If that time comes, before a solution has been found to this problem, very grave hardship will then be inflicted on a large body of traders just at the time when it may well be that economic circumstances are combining to make their business difficult. In those circumstances we do not feel that this problem, however difficult it may be, should be left where it is.

We shall, therefore, take this matter to a Division to emphasise our view that further negotiations should take place and that the Chancellor should deliver in this case the same ultimatum which he told us with pride he delivered in the far more difficult case, where there was much more danger of gaps in the Revenue, concerning the old age pensioners and the new Tobacco Duty. If between now and the next Budget he is prepared to show that same adamant and courageous determination, which he informed us with no little pride he had shown on the other occasion, I feel he will be in a position to give us a Clause which will meet us and, at the same time, will provide at least as much security to the Revenue as he has provided in relation to the exemption from the Tobacco Duty.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 89; Noes, 263.

Division No. 311;]
AYES
[6.30 p.m


Amory, D. Heathcoat
Cooper-Key, E. M.
Foster, J. G. (Northwich)


Anderson, Rt. Hon. Sir J (Scot. Univ.)
Corbett, Lieut.-Col. U. (Ludlow)
Fraser, H. C. P. (Stone)


Assheton, Rt. Hon. R
Crookshank, Capt. Rt. Hon. H F. C.
Fyfe, Rt. Hon. Sir D. P. M


Baldwin, A. E.
Crosthwaite-Eyre, Col. O E.
Gage, C.


Bennett, Sir P.
Digby, S. W.
Gammans, L. D


Bower, N.
Dodds-Parker, A. D
Glyn, Sir R.


Bracken, Rt Hon. Brendan
Drayson, G. B.
Gridley, Sir A.


Buehan-Hepburn, P. G. T.
Drewe, C.
Hannon, Sir P. (Moseley)


Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)
Dugdale, Maj. Sir T. (Richmond)
Harvey, Air-Comdre. A. V


Challen, C.
Eden, Rt. Hon A.
Hinchingbrooke, Viscount


Clarke, Col R S.
Elliot Rt. Hon Walter
Hollis, M C


Conant, Maj. R. J E
Fletcher. W (Bury)
Hudson, Rt. Hon. R. S (Southport)




Hurd, A
Marshall, D. (Bodmin)
Shepherd, W S (Bucklow)


Hutchison, Col J R. (Glasgow. C.)
Marshall, S H. (Sutton)
Spearman, A. C. M.


Jarvis, Sir J
Mellor, Sir J
Stanley, Rt. Hon. O


Jennings, R
Molson, A. H. E
Sutcliffe, H.


Lambert, Hon. G.
Morrison, Rt Hon. W S. (Cirencester)
Thorneycroft, G. E. P. (Monmouth)


Lancaster, Col C G
Noble, Comdr. A. H P
Thorp, Lt.-Col R A F


Langford-Holt, J
Nutting, Anthony
Touche, G. C.


Law, Rt. Hon. R. K
O'Neill, Rt Hon Sir H
Turton, R. H.


Lipson, D. L
Orr-Ewing, I, L
Vane, W. M F


Lloyd, Selwyn (Wirral)
Osborne, C.
Walker-Smith, D.


Low, Brig. A. R W
Peake, Rt. Hon O
Ward, Hon. G. R


Lucas-Tooth, Sir H
Peto, Brig C. H. M
White, J. B. (Canterbury)


Lyttelton, Rt Hon. O.
Pitman, I J.
Williams, Gerald (Tonbridge)


Macdonald. Sir P. (I. of Wight)
Ponsonby, Col. C. E
Winterton. Rt Hon. Earl


Mackeson, Brig. H. R.
Price-White, Lt.-Col. D.
York, C.


McKie, J. H (Galloway)
Reed, Sir S. (Aylesbury)



MacLeod, J
Roberts, H. (Handsworth)
TELLERS FOR THE NOES:


Macmillan, Rt. Hon. Harold (Bromley)
Robinson, Wing-Comdr. Roland
Mr. Studholme and


Macpherson. N (Dumfries)
Ropner Col L
Major Ramsay.




NOES


Adams, Richard (Balham)
Dobbie, W
Lavers, S.


Adams, W. T. (Hammersmith, South)
Dodds, N. N
Lawson, Rt Hon. J J.


Allen, A. C. (Bosworth)
Donovan, T.
Lee, F. (Hulme)


Allen, Scholefield (Crewe)
Driberg, T E. N.
Lee, Miss J. (Cannock)


Anderson, A. (Motherwell)
Dumpleton, C. W.
Leonard, W.


Attewell, H. C.
Edwards, Rt. Hon. Sir C (Bedwellty)
Leslie, J. R


Austin, H. Lewis
Evans, E. (Lowestoft)
Lever, N. H


Awbery, S. S
Evans, S. N. (Wednesbury)
Levy, B. W.


Ayles, W. H
Ewart, R.
Lewis, A. W. J (Upton)


Ayrton Gould, Mrs b
Fairhurst, F
Lindgren, G. S.


Balfour A.
Farthing, W. J
Lipton, Lt -Col M


Barstow, P G
Fernyhough, E
Logan, D G


Barton, C.
Follick, M
Longden, F


Battley, J. R
Foot, M. M.
Lyne, A. W.


Bechervaise, A E
Forman, J. C.
McAdam, W


Benson, G.
Foster, W. (Wigan)
McEntee, V La T


Bing, G. H C
Fraser, T. (Hamilton)
MoGhee, H. G.


Binns, J.
GaMacher, W.
Mack, J. D.


Blenkinsop, A
Ganley, Mrs. C. S.
McKay, J. (Wallsend)


Blyton, W R
George, Lady M. Lloyd (Anglesey)
Mackay, R. W. G (Hull, N. W)


Bowles, F. G (Nuneaton)
Gibbins, J
McKinlay, A S


Braddock, Mrs. E. M ([...] pi, Exch'ge)
Gibson, G W.
Maclean, N. (Govan)


Braddock, T. (Mitcham)
Glanvilte, J E. (Consett)
McLeavy, F


Bramall, E. A.
Gordon-Walker, P. C.
Mainwaring, W. H


Brook, D. (Halifax)
Greenwood, Rt Hon. A (Wakefield)
Mallalieu, J. P. W


Brooks, T. J. (Rothwell)
Greenwood, A. W J (Heywood)
Mann, Mrs. J.


Brown, George (Belper)
Grenfell, D R
Manning, Mrs. L. (Epping)


Brown, T. J. (Ince)
Grey, C. F.
Marshall, F. (Brightside)


Bruce, Maj. D. W T
Grierson, E.
Medland, H. M


Buchanan, G.
Griffiths, D. (Rother Valley)
Middleton, Mrs. L


Burden, T. W
Griffiths, Rt, Hon J. (Llanelly)
Mikardo, Ian


Burke, W. A.
Griffiths, W D (Moss Side)
Millington, Wing-Comdr E R


Butler, H. W, (Hackney, S)
Guest, Dr. L. Haden
Mitchison, G. R


Byers, Frank
Gunter, R. J
Monslow, W


Callaghan, James
Haire, John E. (Wycombe)
Moody, A. S.


Carmichael, James
Halt, Leslie
Morley, R.


Castle, Mrs. B, A.
Hall, W. G.
Morris, P. (Swansea, W.)


Chamberlain, R A
Hamilton, Lieut.-Col R
Morris, Hopkin (Carmarthen)


Champion, A J
Harrison, J.
Mort, D L


Chafer, D.
Hastings, Dr Somerville
Moyle, A.


Chetwynd, G. R
Haworth, J
Nally, W.


Cluse, W. S.
Henderson, A (Kingswinford)
Naylor, T. E.


Cobb, F. A
Herbison, Miss M
Neal, H. (Claycross)


Cooks, F. S.
Hicks, G
Nichol, Mrs. M. E. (Bradford, N.)


Collick, P,
Hobson, C R.
Nicholls, H R. (Stratford)


Colman, Miss G. M
Holman, P
Noel-Baker, Capt F E. (Brentford)


Comyns, Dr. L.
Holmes, H. E (Hemsworth)
O'Brien, T


Cooper, Wing-Comdr. G,
House, G
Oldfield, W H


Corbet, Mrs. F K. (Camo'wall. N W)
Hoy, J.
Oliver, G H


Corvedale, Viscount
Hudson, J H (Ealing, W.)
Orbach, M,


Cove, W. G
Hughes, H. D. (Wolverhampton, W)
Palmer, A. M F


Grossman, R, H S
Hutchinson, H. L. (Rusholme)
Pargiter, G A


Daggar, G
Irving, W J
Parker, J.


Daines, P.
Jay, D P. T
Parkin, B. T.


Dalton, Rt. Hon. H
Jeger, G. (Winchester)
Paton, J. (Norwich)


Dalton, Rt. Hon. H.
Jeger, Dr S. W (St. Pancras, SE.)
Pearson, A.


Davies, Clement (Montgomery)
John, W
Peart, T. F


Davies, Edward (Burslem)
Jones, D. T. (Hartlepools)
Piratin, P,


Davies, Harold (Leek)
Jones, J. H. (Bolton)
Poole, Major Cecil (Lichfield)


Davies, Hadyn (St Panoras, S.W.)
Keenan, W
Popplewell, E,


Deer, G.
Kenyon, C.
Porter E. (Warrington)


Delargy, H J
Kirby, B. V
Portar, G (Leeds)


Diamond, J
Kirkwood, D
Price, M. Philips







Proctor, W. T
Smith, H. N (Nottingham, S.)
Turner-Samuels, M


Pryde, D J.
Smith, S H (Hull, S.W)
Viant, S. P.


Randall, H E
Snow, Capt J W.
Wadsworth, G


Ranger, J
Sorensen, R. W.
Walker, G. H


Rankin, J
Soskice, Maj Sir F
Wallace, G. D. (Chislehurst)


Rees-Williams, D H
Sparks, J. A
Watkins, T. E.


Reeves, J.
Stamford, W
Watson, W. M


Reid, T. (Swindon)
Steele, T.
Webb, M. (Bradford, C.)


Richards, R.
Stewart, Michael (Fulham, E.)
Wells, P. L. (Faversham)


Ridealgh, Mrs. M.
Strauss, G R (Lambeth, N>
West, D. G.


Roberts, Emrys (Merioneth)
Stross, Dr. B.
Wheatley, Colonel M. J


Robertson, J. J. (Berwick)
Stubbs, A. E
Wilkes, L.


Rogers, G H. R,
Swingler, S.
Wilkins, W. A.


Ross, William (Kilmarnock)
Sylvester, G. O
Willey, O. G. (Cleveland)


Royle, C.
Symonds, A. L.
Williams, D. J. (Neath)


Sargood, R
Taylor, H. B. (Mansfield)
Williams, J. L. (Kelvingrove)


Scollan, T
Taylor, R. J. (Morpeth)
Williams, W. R (Heston)


Shackleton, E A. A.
Taylor, Dr. S. (Barnet)
Willis, E


Sharp, Granville
Thomas, D. E. (Aberdare)
Wills, Mrs. E A


Shawcross, C N. (Widnes)
Thorneycroft, Harry (Clayton)
Woods, G. S


Silverman, J (Erdington)
Thurtle, Ernest
Wyatt, W.


Silverman, S S. (Nelson)
Tiffany, S.
Young, Sir R. (Newton)


Simmons, C. J.
Timmons, J
Zilliacus, K.


Skeffington-Lodge, T. C
Titterington. M. F.



Skinnard, F W.
Tolley, L.
TELLERS FOR THE NOES:


Smith, C (Colchester)
Tomlinson, Rt. Hon. G
Mr. Joseph Henderson and




Mr. Hannan.

NEW CLAUSE.—(Postwar refunds of excess profits tax.)

In paragraph 2 of Part 11 the Seventh Schedule to the Finance (No.2) Act,1939,the following sub-paragraph shall be inserted after sub-paragraph(2):
(3) Any sums repayable by virtue of section thirty-eight of the Finance (No. 2) Act, 1945, as excess profits tax postwar refunds under Subsection (I) of Section twenty-eight of the Finance Act, 1941, as amended by Section thirty-seven of the Finance Act, 1942, shall be deemed to have become an asset of the trade or business on the first day of January, nineteen hundred and forty-six, and for this purpose the sum repayable shall be taken to be the gross amount before deduction of income tax.

Brought up, and read the First time.

Sir H. Lucas-Tooth: I beg to move, "That the Clause be read a Second time."
The new Clause in my name is of a somewhat technical character and of rather narrow ambit, but I hope that I shall be able to explain to the House its purpose, which is fairly simple, and to show that there is a matter of quite important principle involved. The House will remember that from 1st April, 1940, to 31st December, 1945, Excess Profits Tax stood at 100 per cent. That is to say, the whole of the profits of a trade or business above the standard revenue of the business was taken in tax. At the time that the tax was imposed, however, it was provided by the Finance Act in question that 20 per cent. of the total amount taken from a business during the 100 per cent, period should ultimately be repaid, subject to the condition that

on repayment the amount repayable would be added to the capital of the business and not distributed by way of dividend or profit.
The pledge given in the Finance Act, 1940, was in fact implemented, and generously implemented, by the present Chancellor of the Exchequer in his first Budget—the Finance (No. 2) Act, 1945. That Act was passed on 20th December, 1945. Under it, a proportion of the profits of each business which has been paid away in E.P.T. during the too per cent. period became repayable to the business concerned, and it was provided by that Act that the sums were to be repaid as soon as may be after a final settlement of the total amount of tax in respect of which they were repayable. There was provision made for payment to be made on account in appropriate cases, but nothing was laid down as to the date of payment. I readily concede that it would have been impossible for the Government to have provided that payment should have been made on some particular date, but I think that it was of some considerable importance that the Finance (No. 2) Act, 1945, should have failed to provide that the sums repayable should be deemed to have been paid on a particular date I will explain the reason why.
These sums had to be added to the capital of the business concerned. That was part of the scheme. Every one has always entirely agreed with that in principle. By adding it to the capital of a business, that at once increases the amount which could be taken as the


standard profits of the business. It would not be invariably the case because the standard profits could be assessed in different ways, but I think that it is probably true to say that in 1945 the majority of businesses were having their standard profits assessed on the basis of capita] employed, and when that capital was increased it at once increased the standard profits and, to that extent reduced the amount which could be charged in tax against the businesses for the following year. In this particular case the following year was the calendar year 1946, the tax being finally abolished at the end of 1946. It becomes apparent that it was of great concern to businesses, who were receiving very large sums by way of repayment, when they could bring those sums into account for assessing their standard profits, and so arrive at the amount of Excess Profits Tax which would be levied against them in the year 1946. What has happened in fact, I am told, is that businesses who have received repayment have been allowed to reckon those repayments as added to their capital as on the date where payment is actually made.

Mr. Glenvil Hall: Only if they are using them.

6.45 p.m.

Sir H. Lucas-Tooth: I think that it will be generally agreed that very few businesses indeed will be employing a smaller capital than the amount they were allowed to reckon for the purposes of E.P.T. in 1946. But whether it is a small number of businesses or a large is immaterial. The point is that a number of businesses would have been able to get a considerable advantage if they could have brought into account the amount due to them under the repayment provided for in the Chancellor's Budget. If as I understand from the Financial Secretary's interruption, it is a fact that in a number of cases these sums were able to be brought into account as on the date of actual payment, it means that the amount of tax these businesses have been assessed on during 1946 has been entirely at the discretion of the Revenue.

Mr. Glenvil Hall: indicated dissent.

Sir H. Lucas-Tooth: That is as I understand it from conversations with those who had been subjected to this tax, and if that is not so, I would like to have some explanation from the Government. There

are two reasons why this is entirely unfair. In the first place, when the boot was on the other leg, and it was a question of the Revenue wishing to take the amount paid by the company as E.P.T. into account, it was expressly and narrowly defined that the amount payable by the company should be deducted at the earliest possible date. Paragraph 2 of Part II of the First Schedule of the Finance Act, 1942, states that any E.P.T. in respect of businesses had to be deducted from the capital employed, and such E.P.T. had to be deemed to be deducted on the first date on which it was payable. That is to say on the first day of the next accounting year. In other words, when it suited the Revenue to do so, they regarded a company or business as making payment on the earliest possible date when it was physically impossible for any business to make a payment, because no assessment could be made in the half second that passed between the end of the preceding year and the first day of the next year. The present case is precisely the same in principle, only now it is the other way round.
In this case, it is the re-payment of E.P.T. which it is to the advantage of the business to take into account. I should have thought that if the original provision was fair, and I have no complaint about it, it would be equally fair to say that we should regard the repayment to be made on the first day it became due, that is to say, on 1st January, 1946. Therefore, as a matter of fair treatment as between the Government and business concerns, I submit that this is the proper date to take.

Mr. Glenvil Hall: Would the hon. Member also explain to the House, if that argument holds, how a business can be said notionally to be using capital which, on its own showing, it has not yet received by way of refund in respect of E.P.T.?

Sir H. Lucas-Tooth: I do not think I need weary the House with that. I need only refer the right hon. Gentleman to the Section he put in the same Finance Act, permitting repayment of E P.T. to be set off against arrears of E.P.T.due to the business concerned. If it were true that the company or business had not been using, as capital, the amount due to be repaid to them, then I should fully concede that the amount should not be taken into account. I do not think that


any propriety could come about as a result of the Clause I am moving, but if that is so, I have no doubt that the Government will provide for it by making some suitable amendment. I put my case no higher than this: that where a business was, in fact, using as capital an amount as large or larger than the repayment due to them, it is fair and proper that as soon as that repayment becomes due they should be allowed to take it into account in reckoning their tax for the year in question.
I wish now to refer to the last sentence in the Clause, which deals with Income Tax. This is really a separate point, and I added this sentence merely to be in order in raising this point. The point is this: the amount repayable to a business by way of postwar repayment of E.P.T. is expressed to be subject to tax for the year 1946–47, and if that is so, then, strictly speaking, the amount deducted from any repayment should not be brought into account. The tax would not be strictly payable until 1st January, 1947—that is to say, after E.P.T. has ceased to be payable at all. If that is the position, the Government should acknowledge, although they will in some cases recover the amount of tax sooner than 1st January, 1947, that the deduction ought not to be taken into account before that date. I realise that this is a repayment out of a taxed sum, and there is, therefore, a good case for saying that only the net amount should be repaid to the business concern. The Government cannot have it both ways. Either this is an amount which should be taken into account as new profits for the year 1946, when the gross amount should be reckonable for E.P.T. purposes during the year, or it is repayment in respect of income for an earlier year, in which event 1 submit that the Government will have to accede to the propriety of the Clause I am moving. I do not know what attitude the Government will take, but if they can see their way to accept something on the lines of the first part of the Clause, I should be perfectly willing to withdraw the last lines, so as not to bring Income Tax into account.

Colonel Crosthwaite-Eyre: I beg to second the Motion.
It seems to me that the Government have got to answer a major question,

which is at what stage, and how, does an E.P.T. claim for refund become available as standard capital? As I understand it, it is purely a matter of hazard. If, during the year 1946, a company's claim receives approval and the money is paid in for the use of that company, in accordance with the Government's limitations the date on which that money is received is the date from which it may be taken into account as standard capital. If so, it means that if a company is lucky, it gets the benefit of the refund, but if another company is held up because some questions are asked, or because some correspondence is lost between one Government Department and another, it gets practically no benefit at all. That arbitrary decision seems to be entirely wrong.
If this Clause is accepted, it will mean that there will be the same treatment for all companies entitled to a refund, irrespective of any hazards which may beset an application. It seems to me that if E.P.T. is claimed by the Government as payable in each year, irrespective of the accounting period, the same policy should be pursued in regard to refunds. As the right hon. Gentleman knows, if a company failed to make the standard rate of income in one year, it did not mean that it could set off its previous E.P.T. against that loss, whatever E.P.T. it owed. A company had to pay in the money, irrespective of the actual balance of indebtedness. As I have said, the same policy should be pursued in regard to refunds, which should all become due together and should all be assumed to be paid together. Let the whole of industry be treated in the same way.
The Financial Secretary asked, during the speech of my hon. Friend the Member for South Hendon (Sir H Lucas-Tooth), how it could be said that the money was being employed by a firm until it had been paid. I think he has gone slightly wrong, because the only point in a firm trying to get a refund is that it wants to use the money, and can satisfy the Government that it does wish to use it. Only the other day, I had a case of an engineering firm which wanted one of these refunds. Directly the application was put in, an order was placed for the machinery it required. I am sure that the Financial Secretary would not say that the firm was committed from the time or date the order was placed, and not the date when the money was paid. What


I wish to say is that the payment shall rank from the time when the capital is employed rather than when payment is made.

The Solicitor-General: This Clause raise, a point in a narrow compass. If accepted, it would cost million gross, and bearing in mind that E.P.T. is a deduction for Income Tax purposes, it would cost f8 million. Therefore, it would be an extremely expensive proposal.

Sir H. Lucas-Tooth: I would point out that I offered to withdraw the last sentence in regard to Income Tax, which, I think, would again roughly halve the total amount of the cost.

7.0 p.m.

The Solicitor-General: We carefully worked out the figure according to the new Clause. What the cost would be if we treated the net amount could be calculated, I suppose, according to Income Tax at 9s. in the£ but it would be expensive even if we made a rough calculation of that sort, and scaled it down accordingly. The hon. Baronet proposed that the gross amount should be treated as capital, whether received or not, from 1st January, 1946, with the result that it would scale up, by the statutory percentage, the capital computed in arriving at standard profit. Is there any precedent for that in Income Tax and Excess Profits Tax legislation? The hon. Gentleman referred to Paragraph 2 of Part II of the Seventh Schedule, and said that for that purpose the amount is due at the beginning of the accounting period. There is no precedent for the Government charging interest on overdue Income Tax.
What the hon. Baronet and his hon. and gallant Friend are asking is that if the Government delay in paying at the earliest moment this refund of Excess Profits Tax, they should pay interest on that at the rate of 8 or 10 per cent., according to whether the business is being carried on by a partnership or a company. But the converse does not hold good. Supposing the taxpayer does not pay the Excess Profits Tax or Income Tax which is due, the Revenue does not charge interest on that overdue payment, save in the sense which was indicated by the hon. Member for South Hendon (Sir H. Lucas-Tooth). It does not charge any interest on Income Tax. So the proposal to pay interest on what is

notionally an overdue payment of Excess Profits Tax refund by the Government is entirely novel. There is no precedent fot that in tax legislation.
Apart from that, it seems to me that both hon. Members opposite proceeded upon a misunderstanding of the object of Section 38 of the Finance (No. 2) Act, 1945. The provision for interim payments is purely permissive, and the Section says that the refund, in order to comply with the undertaking in earlier Excess Profits Tax legislation, has to be paid after the final assessment of tax. It also states that if it should turn out to be possible to make an earlier interim payment, then, as a matter of concession and indulgence to the taxpayer, that concession will he extended to him. He will get it earlier than he is entitled to have it. The hon. Baronet has pressed the Government to go still further, and to say that if they do not pay as from 1st January, 1946. interest should be charged at 8 or 10 per cent. as from that date to the actual date of receipt.

Sir H. Lucas-Tooth: In the converse case that is what the Government did.

The Solicitor-General: Under present law it ranks as capital provided it is employed as capital as from the date of receipt; but it does not say that in the case of tax which is overdue interest is to be charged. The Excess Profits Tax which is quasi overdue, does not have interest charged upon it. Be that as it may, the main answer 1 make is that Section 38 of the Finance (No. 2) Act, 1945, provides for a concession which will be extended to the taxpayer if it can be done. He will get his tax refund earlier than he was entitled to expect it, and will only get it if it is practical to give it to him at that earlier stage. For those reasons, I ask the House to say that no case has been made out to show why the Government should go further in the direction of a concession than they have already done.

Colonel Crosthwaite-Eyre: When the Solicitor-General talks about 8 to 10 per cent. interest, that applies to only one financial year, and only if the Excess Profits Tax is at the rate of 60 per cent., and not ion per cent.

The Solicitor-General: It is true that it applies to one financial year, but the interim payments began to be paid in


Marcn. 1946, and most taxpayers have received their interim refunds between that date and December, 1946. It is true that the interest charge relates to that period only, but hon. Members opposite are asking for a concession which will cost £8 million net, which is an extensive concession. It would amount to an extension of a concession already accorded to the taxpayer, and no case has been made out for it at all.

Mr. Harold Roberts: I intervene with diffidence in this battle of the experts, but, with respect to the Solicitor-General, I do not think it is fair to say that the new Clause means that this amount would be added to the capital for E.P.T. The Clause does not say so; it says that it shall be an asset of the concern. That is not necessarily capital for E.P.T. purposes. I have known cases where an inspector has said that cash at the bank was not capital for taxation purposes, so I presume that it may be competent for an inspector, where a company is adequately financed, to argue that the amount theoretically owing was merely an outside investment. If the concern was not "flush" with money, and had incurred overdrafts on the strength of that, it would seem proper that the inspector should treat the matter in that light. The cost to the Revenue, as stated by the Solicitor-General, was not based by him on completely sound facts. There is a further point The fact that there will be an increased cost to the Revenue in one year does not dispose of the matter if what is to be aimed at is fairness as between taxpayers. It is not satisfactory that one taxpayer should get a benefit which another does not

Question put, and negatived.

CLAUSE 1.—(Hydrocarbon oils.)

Mr. Glenvil Hall: I beg to move, in page r, line i6, after the second "oils." to insert," or any kerosene."
Perhaps it would be convenient if, on this Amendment, I dealt with the consequential Amendments to page 2

Mr. Speaker: It would be as well to take them all together.

Mr. Glenvil Hall: We are here adding kerosene to the other oils which were exempted from duty by my right hon. Friend the Chancellor when he made his

Budget statement. During the passage of the Resolution through the House, and later on during Committee, a good deal of pressure was brought to bear on my right hon. Friend, from every quarter of the House, to include kerosene, both because of its use in tractors on farms and because the oil lamp is still used in thousands of cottage homes. The cost of the concession will be 1½million. These Amendments put kerosene into the same category as other heavy oils.

Mr. Orr-Ewing: As the initiator of the Debate which led to the undertaking which the Financial Secretary is now implementing, I should like to offer him my thanks. During Committee we sought to introduce words which were equal in effect to those of the present Amendment, but our drafting was not satisfactory. I think the present drafting is far simpler, and makes the position quite clear. The Chancellor is at least doing something for agriculture, which is our greatest dollar saver. The only thing it does not do is to supply the necessary kerosene. Still, I thank him.

Amendment agreed to.

Further Amendments made: In page 2, line 20, at end, insert:
the expression' kerosene ' means hydrocarbon oils which are not light oils as defined in Subsection (3) of Section two of the Finance Act, 1928, and of which more than fifty per cent by volume distils at a temperature not exceeding 240 degrees centigrade

In line 23, leave out "and gas oils. and insert" gas oils and kerosene."

In line 25, leave out "means oils as defined in," and insert "has the meaning assigned to it by."

In line 27, after "shall,' insert:
(a) except as to Subsection (1) thereof so far as it relates to kerosene

In line 29, at end, insert:
and
(b) as to Subsection (1) thereof so far as it relates to kerosene, come into operation at six o'clock in the evening on the thirty-first day of August nineteen hundred and forty-seven "—[Mr. Glenvil Hall.]

CLAUSE6.—(Intermediate rate of purchase tax on certain goods.)

Mr. Glenvil Hall: I beg to move, in page 5, line 28, after "classes," to insert (other than mirrors)."
Perhaps we might also discuss the next Amendment on the Paper. When we


reach the Third Schedule there will be a further Amendment which we shall ask the House to accept. This Amendment takes mirrors, which were described when we debated it as "domestic mirrors"—although these Amendments go a little beyond that—out of the 100 per cent. Purchase Tax class and puts them into the 66⅔ per cent. category. This again is a concession promised by my right hon. Friend, which is implemented by these Amendments.

Amendment agreed to.

Further Amendment made: In page 5 line 39, at end, insert:
(2) Purchase tax shall become chargeable at the intermediate rate in respect of the following goods in respect of which tax was made chargeable at the higher rate by Section seventeen of the Finance Act, 1942, that is to say, mirrors of the classes specified in the Third Schedule to this Act not being goods falling within any of the classes specified in the third column of the Seventh Schedule to the Finance (No. 2) Act, 1940. or within any of the classes specified in the entries in the Seventh Schedule to the Finance Act, 1942, relating to goldsmiths' and silversmiths' wares, to articles made wholly or partly of ivory, amber, jet, coral, mother-of-pearl, natural shells, or tortoiseshell, or of semiprecious stones, and to fancy or ornamental articles."—[Mr. Glenvil Hall.]

CLAUSE 7.—(Cesser of charge and reduction of rates of purchase tax in respect of certain goods.)

Mr. Glenvil Hall: I beg to move, in page 7, line 2, to leave out "class," and to insert "classes."
This Amendment should be considered with the three Amendments which follow. This particular Clause deals with the cesser of charge and reduction of rates on Purchase Tax, and we shall be dealing with this again when we reach the Schedule.

Amendment agreed to.

Further Amendments made: In page 7, line 2, leave out "Fifth Schedule to this Act," and insert:
Schedule to this Act (Purchase Tax: Exemptions, and Reductions of Rates.)

In line 6, leave out "Fifth Schedule to this Act," and insert:
Schedule to this Act (Purchase Tax: Exemptions, and Reductions of Rates.)

In page 7, leave out lines 8 to 12, and insert:
there shall be made in the Seventh Schedule to the Finance (No. 2) Act, 5940, and in the Seventh Schedule to the Finance Act, 1942,

the Amendments directed to be made therein respectively by the Schedule to this Act (Purchase Tax: Amendments of Seventh Schedules to Finance (No. 2) Act, 1940, and Finance Act, 1942, consequential on Exemptions and Reductions of Rates provided by Fifth Schedule)."—[Mr. Glenvil Hall.]

CLAUSE 8.—(Commencement of two preceding sections, and saving.)

Amendment made: In page 7, line 14, leave out from "operation," to "shall," in line 15, and insert:

"(a) so far as they relate to exemption from tax in respect of goods of a class specified in the Schedule to this Act (Purchase Tax: Exemptions, and Reductions of Rates) or to reduction of the rate of tax in respect of goods of a class specified in that Schedule, on the sixteenth day of April, nineteen hundred and forty-seven, or the tenth day of July, nineteen hundred and forty-seven, according as the one or the other of those dates is specified in that Schedule in relation to goods of that class;
(b) so far as they relate to mirrors, on the said tenth day of July;
(c) so far as they relate to road vehicles, on the eighteenth day of June, nineteen hundred and forty-seven; and
(d) as respects all other matters, on the said sixteenth day of April; and".—[Mr. Glenvil Hall.]

CLAUSE 13.—(Relief from balancing charges for certain cotton spinning concerns.)

7.15 p.m.

Mr. Glenvil Hall: I beg to move, in page 9, line 23, after "grant," to insert:
to concerns in the cotton industry.
This Amendment links up with another Amendment in page 9, line 41, after "cotton," to insert:
or of staple rayon fibre not exceeding three inches in length.
As the House will remember, this Clause was mentioned in the first place by my right hon. Friend during his Budget speech, and was, as he then said, inserted after consultation with the President of the Board of Trade. It is a provision to assist the cotton industry in its efforts to meet its obligations in the postwar world. The great hope is that cotton concerns will amalgamate and form larger units. It was pointed out to the Government that there might be some holding back on the part of some concerns who might feel they would have to repay to the Government, by way of a balancing charge on the sale of machinery, a good deal of money in the shape of Income Tax. What we are doing here is reducing the rate of Income


Tax to half the standard rate. Since the Clause was first drafted, it has been pointed out to my right hon. Friend that certain concerns manufacturing short staple rayon fibre are part of the cotton industry, and there is every reason why they should be included. That is the reason for these two Amendments.

Amendment agreed to.

Further Amendment made: In page 9, line 41, after "cotton," insert:
or of staple rayon fibre not exceeding three inches in length.

CLAUSES 14 10 18.—(Retirement and other benefits for directors and employees.)

The Solicitor-General: I beg to move, in page 10, line 13, to leave out Clauses 14 to 18.
This Amendment is consequential upon the moving of the new Clauses dealing with directors' pensions, and so on. These were the Clauses which, in the Bill as it was first produced, dealt with this matter, and they are now sought to be left out because the new Clauses have been substituted.

Mr. Nigel Birch: I think it ought to be recorded, in view of the omission of these Clauses, that in a Finance Bill it is very rare for such a large portion to be taken out. This must, therefore, be one of the most carelessly drafted Finance Bills we have had for a very long time.

Amendment agreed to.

CLAUSE 24.—(Rate of the profits tax.)

Mr. Gammans: I beg to move, in page 22, line 7, at the end, to insert:
(4) Where there falls to be included in the profits of a trade or business for any chargeable accounting period any interest payable under Subsection five or Section ten of the War Damage Act, 1943, the amount chargeable by way of the profits tax in respect of that period shall be reduced by an amount equal to seven and a half per cent. of the amount of that interest.
When this Clause was discussed in Committee, the Chancellor undertook to have another look at it. I have put down this Amendment in order to give him the opportunity of, I hope, agreeing with the arguments which were put forward then. I do not intend to go over the ground again. We are simply suggesting that the interest which would be received by an owner of property in

respect of value payments should not be computed for the purpose of Profits Tax. This is income of a very exceptional kind, and if the Chancellor agrees with our view he will not be creating any sort of precedent. It will happen only this year, and not after that. I feel very strongly that the owners of property who, in many cases, have for some years been denied their normal income from that property because it was destroyed during the war, should not be called upon to pay a Profits Tax on an interest on those value payments. That seems to me most extraordinary and inequitable. The Chancellor said he would have another look at it, and I sincerely hope that he has done so, and is now prepared to accept this Amendment.

Sir J. Mellor: I beg to second the Amendment.
I wish only to remind the Financial Secretary of a point which I stressed in Committee, that this Profits Tax is a tax of a special character, discriminating against that portion of the profits which is distributed. The purpose of this is to encourage businesses to plough back their profits rather than distribute them to the shareholders. That may be reasonable over the broader aspect, but I submit that this income is of a very special character and companies should be at liberty to distribute it to the shareholders without any special penalty being imposed upon that distribution. Therefore, in my submission, the increased element of the Profits Tax in respect of the distributed portion of the profits ought not to be applicable at all to this source of income, and I hope that the Financial Secretary will be able to give us a satisfactory answer

The Solicitor-General: I am very sorry to have to disappoint the hon. Member for Hornsey (Mr. Gammans) and the hon. Member for Sutton Coldfield (Sir J. Mellor). It is true that the hon. Member for Hornsey raised this point during the Committee stage and my right hon. Friend has since very carefully considered what was said. On reflection, however, he must adhere to the principle in general that one cannot differentiate as between sources of income. Franked investment income is different because the Profits Tax is already paid, but this is income


like general income, and there is not sufficient reason, as far as we can see, for excluding it from the category of general income and putting it in a privileged position.
It has, of course, notionally accumulated during the war years. In point of fact, it is being treated as income in the year of receipt, and, therefore, it will fall to be charged at the 9s. rate of Income Tax, whereas it accumulated notionally during the period when the rate of Income Tax was 10s. in the £. The taxpayer has already got a measure of advantage in that respect, but, broadly speaking, the fact that it is liable to Profits Tax will compensate for the additional advantage he has got in having it treated now as income on which is payable the present rate of Income Tax rather than that rate which prevailed during the years when it notionally accumulated. Apart from that, the major objection which we feel is that no case is made out for differentiation between this type of income and other types of income, and if one accepts the principle that one should give a privilege to this particular sort of income, then it is difficult not to go on and work out infinite differentiations between many other different types.

Captain Crookshank: That is a most disappointing reply. The Solicitor-General says that the Government cannot differentiate between one income and another. I should have thought that this was a very special and peculiar type of income. It is not everybody who has his house value destroyed or gets a value payment and has the interest on the sum which has accumulated paid in one year. In those respects, it is entirely different from any other income, and to grant the concession asked for here would not open the door to any kind of precedent unless

there is going to be another war, another series of value payments, and another occasion during which the interest will accumulate over a number of years. The Solicitor-General has been most unfortunate in the arguments which he has been provided with or which he has sought for himself in this matter, and I hope that even now he will consult with the Chancellor of the Exchequer or the Financial Secretary to the Treasury and see whether this concession cannot be granted.

The amount of money involved cannot be very great, and no precedent can be established except on the assumption that there will be another war. There is no similarity to any other kind of income whatsoever. To say that by good fortune these people are going to receive this income when the rate of Income Tax is 9s. in the £ instead of 10s. in the £ which is the rate of Income Tax they would have paid had they received it at an earlier period, is really no kind of consolation and is not very good sense. It was always foreseen that at the time when these value payments would be paid Income Tax would be at a rate lower than during the war and, therefore, to say that some advantage is accruing to these unfortunate people seems a very poor argument. Will the Financial Secretary tell us what the estimate for this concession will be? If we find, contrary to my expectations, that it is a very large sum indeed then possibly my hon. Friends would think they were not arguing a very good case. I do not believe that that can be so. I hope, therefore, that before the Financial Secretary entirely closes the door he will tell us what the financial cost would be if this Amendment were carried.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 88; Noes, 260.

Division No. 312.]
AYES.
[7.27 p.m.


Amory, D. Heathcoal
Crosthwaite-Eyre, Col. O. E.
Hannon, Sir P. (Moseley)


Assheton, Rt. Hon. R
Cuthbert. W. N.
Harvey, Air-Comdre. A. V.


Astor, Hon. M
Davies, Clement (Montgomery)
Hurd, A.


Baldwin, A. E
Digby, S. W.
Hutchison, Col. J. R. (Glasgow, C.)


Bennett, Sir P.
Dodds-Parker, A. D
Jarvis, Sir J


Birch, Nigel
Drayson, G. B
Jennings, R.


Bossom, A. C
Drewe, C.
Lancaster, Col. C. G.


Bower, N.
Dugdale, Maj. Sir T. (Richmond)
Langford-Holt, J.


Boyd-Carpenter, J. A.
Eden, Rt. Hon A.
Law, Rt. Hon. R. K.


Bracken, Rt. Hon. Brendan
Fletcher, W. (Bury)
Linstead, H N.


Buchan-Hepburn, P G. T
Gage, C.
Lipson, D. L.


Byers, Frank
Gammans, L. D.
Lloyd, Selwyn (Wirral)


Clarke, Col R. S.
George, Lady M. Lloyd (Anglesey)
Low, Brig. A. R. W.


Cooper-Key, E. M.
Grant, Lady
Lucas-Tooth, Sir H.


Corbett, Lieut.-Col. U. (Ludlow)
Gridley, Sir A.
Lyttelton, Rt. Hon. O.


Crookshank, Capt. Rt. Hon H. F C
Gruffydd, Prof. W. J.
Macdonald, Sir P. (I of Wight)




Macpherson, N. (Dumfries)
Rayner, Brig. R
Vane, W. M F.


Marlowe, A. A. H.
Reed, Sir S. (Aylesbury)
Wadsworlh, G.


Marshall, D. (Bodmin)
Roberts, H. (Handsworth)
Walker-Smith, D.


Mellor, Sir J
Roberts, W. (Cumberland, N.)
Ward, Hon. G. R


Molson, A. H. E.
Robinson, Wing-Comdr. Roland
Wheatley, Colonel M. J.


Morris, Hopkin (Carmarthen)
Ropner Col L
White, Sir D. (Fareham)


Nutting, Anthony
Sanderson, Sir F.
White, J. B. (Canterbury)


O'Neill, Rt. Hon. Sir H
Smith, E. P. (Ashford)
Williams, Gerald (Tonbridge)


Orr-Ewing, I. L.
Spearman, A. C M.
Winterton Rt. Hon. Earl


Osborne, C.
Stanley, Rt Hon. O
York, C


Peake, Rt. Hon. O.
Studholme, H G



Peto, Brig. C. H. M
Sutcliffe, H
TELLERS FOR THE AYES:


Pitman, I. J.
Teeling, William
Major Conant and


Ponsonby, Col. C. E
Thorneycroft, G. E. P. (Monmouth)
Lieut.-Colonel Thorp.


Ramsay, Maj. S
Turton, R. H.





NOES.


Adams, Richard (Balham)
Donovan, T.
Leonard, W.


Adams, W. T. (Hammersmith, South)
Durbin, E. F. M
Leslie, J. R.


Allen, A. C. (Bosworth)
Ede, Rt. Hon. J. C.
Levy, B. W.


Allen, Scholefield (Crewe)
Edwards, Rt. Hon. Sir C. (Bedwellty)
Lewis, A. W. J. (Upton)


Anderson, A. (Motherwell)
Edwards, John (Blackburn)
Lindgren, G. S


Attewell, H. C
Edwards, W. J. (Whitechapel)
Logan, D. G.


Austin, H. Lewis
Evans, E. (Lowestoft)
Longden, F


Awbery, S. S.
Evans, S. N. (Wednesbury)
Lyne, A. W


Ayles, W. H.
Ewart, R.
McAdam, W.


Ayrton Gould, Mrs. B
Fairhurst, F
McEntee, V. La T.


Baird, J
Farthing, W. J.
McGhee, H. G.


Balfour, A.
Field, Capt. W J
Mackay, R. W. G (Hull, N. W.)


Barstow, P. G.
Follick, M
McKinlay, A. S.


Barton, C.
Forman, J. C
Maclean, N. (Govan)


Battley, J. R.
Foster, W. (Wigan)
McLeavy, F


Bechervaise, A. E.
Fraser, T (Hamilton)
Mallalieu, J. P. W.


Belcher, J. W.
Ganley, Mrs C S
Manning, Mrs. L. (Epping)


Bellenger, Rt. Hon. F. J.
Gibbins, J.
Marquand, H. A


Benson, G.
Gibson, C W
Marshall, F. (Brightside)


Bevan, Rt. Hon. A. (Ebbw Vale)
Glanville, J. E. (Consett)
Medland, H M


Bing, G. H. C
Gordon-Walker, P. C.
Middleton, Mrs. L


Blenkinsop, A
Greenwood, A. W J. (Heywood)
Mikardo, Ian


Blyton, W. R.
Grenfell, D R
Millington, Wing-Comdr. E. R.


Bowden, Flg.-Offr. H. W
Grey, C. F
Monslow, W


Bowles, F. G. (Nuneaton)
Grierson, E
Moody, A. S.


Braddock, Mrs. E. M (L'p, Exch'ge)
Griffiths, D. (Rother Valley)
Morgan, Dr. H. B.


Braddock, T. (Mitcham)
Griffiths, Rt. Hon. J. (Llanelly)
Morley, R.


Brook, D. (Halifax)
Griffiths, W. D (Moss Side)
Morris, P. (Swansea, W.)


Brooks, T. J. (Rothwell)
Gunter, R. J
Mort, D. L


Brown, George (Belper)
Haire, John E (Wycombe)
Moyle, A.


Brown, T J. (Ince)
Hale, Leslie
Nally, W.


Bruce, Maj D. W T
Hall, W. G.
Naylor, T. E.


Buchanan, G.
Hamilton, Lieut.-Col R.
Neal, H. (Claycross)


Burden, T. W
Hannan, W (Maryhill)
Nichol, Mrs. M. E. (Bradford, N.)


Burke, W. A.
Harrison, J
Nicholls. H. R. (Stratford)


Butler, H. W. (Hackney, S.)
Hastings, Dr Somerville
Noel-Baker, Capt. F. E. (Brentford)


Callaghan, James
Henderson, A. (Kingswinford)
Noel-Baker, Rt. Hon. P. J. (Derby)


Carmichael, James
Henderson, Joseph (Ardwick)
O'Brien, T.


Chamberlain, R. A.
Herbison, Miss M.
Orbach, M.


Champion, A. J.
Hicks, G.
Paling, Rt. Hon. Wilfred (Wentworth)


Chater, D.
Hobson, C. R.
Palmer, A. M. F.


Chetwynd, G. R.
Holman, P
Pargiter, G. A.


Cluse, W. S.
Holmes, H. E. (Hemsworth)
Parker, J.


Cocks, F. S.
House, G
Parkin, B. T.


Collick, P.
Hoy, J.
Paton, J. (Norwich)


Collins, V. J.
Hudson, J. H. (Ealing, W.)
Peart, T. F


Colman, Miss G. M.
Hughes, H. D. (Wolverhampton, W.)
Poole, Major Cecil (Lichfield)



Hutchinson, H. L. (Rusholme)



Comyns, Dr. L.
Hynd, J. B. (Attercliffe)
Popplewell, E.


Cooper, Wing-Comdr. G.
Irving, W. J
Porter E. (Warrington)


Corbet, Mrs. F. K. (Camb well N W.)
Janner, B
Porter, G. (Leeds)


Corvedale, Viscount
Jay, D. P. T
Price, M. Philip*


Cove, W. G
Jeger, G. (Winchester)
Proctor, W. T.


Crawley, A
Jeger, Dr. S W (St. Pancras, S. E.)
Pryde, D. J.


Daggar, G.
John, W
Randall, H. E.


Daines, P.
Jones, Rt. Hon. A. C. (Shipley)
Ranger, J


Dalton, Rt. Hon. H.
Jones, D. T. (Hartlepools)
Rankin, J.


Davies, Edward (Burslem)
Jones, J. H. (Bolton)
Reeves, J.


Davies, Ernest (Enfield)
Keenan, W.
Reid, T. (Swindon)


Davies, Harold (Leek)
Kenyon, C.
Richards, R.


Davies, Hadyn (St. Pancras, S. W.)
Kinghorn, Sqn.-Ldr E
Ridealgh, Mrs. M.


Davies, R. J. (Westhoughton)
Kirby, B. V
Robertson, J. J. (Berwick)


Deer, G.
Kirkwood, D
Rogers, G. H. R.


Delargy, H. J
Lavers, S.
Ross, William (Kilmarnock)


Diamond, J.
Lawson, Rt Hon. J. J.
Royle, C.


Dobbie, W
Lee, F. (Hulme)
Sargood, R


Dodds, N. N.
Lee, Miss J (Cannock)
Scollan, T.







Segal, Dr. S
Stubbs, A. E
Watson, W. M


Shackleton, E. A A
Sylvester, G O
Webb, M. (Bradford, C.)


Sharp, Granville
Symonds, A. L.
Wells, P. L. (Faversham)


Shawcross, C N. (Widnes)
Taylor, H. B. (Mansfield)
West, D. G.


Silverman, J. (Erdington)
Taylor, R. J. (Morpeth)
Whiteley, Rt. Hon. W


Silverman, S. S. (Nelson)
Taylor, Dr. S. (Barnet)
Wilkes, L.


Skeffington-Lodge, T. C
Thomas, D. E. (Aberdare)
Wilkins, W. A.


Skinnard, F W.
Thomas, I. O. (Wrekin)
Williams, D. J. (Neath)


Smith, C. (Colchester)
Thorneycroft, Harry (Clayton)
Williams, J. L. (Kelvingrove)


Smith, H. N. (Nottingham, S.)
Thurtle, Ernest
Williams, Rt. Hon. T. (Don Valley)


Smith, S. H. (Hull, S. W.)
Tiffany, S.
Williams, W. R. (Heston)


Snow, Capt. J. W.
Timmons, J.
Willis, E.


Sorensen, R. W.
Titterington, M. F
Wills, Mrs. E A


Soskice, Maj Sir F
Tolley, L.
Woodburn, A.


Sparks, J. A.
Tomlinson, Rt. Hon. G
Woods, G. S


Stamford, W
Turner-Samuels, M
Wyatt, W.


Steele, T.
Viant, S. P
Yates, V. F.


Stewart, Michael (Fulham, E.)
Walkden, E.
Young, Sir R. (Newton)


Strachey, J
Walker, G. H.
Zilliacus, K.


Strauss, G. R (Lambeth, N)
Wallace, G. D. (Chislehurst)



Stross, Dr. B
Watkins, T. E
TELLERS FOR THE NOES




Mr. Pearson and Mr. Simmons

CLAUSE 25.—(Exemption of individuals and partnerships of individuals from the profits tax.)

The Solicitor-General: I beg to move, in page 22, line 44, at the end, to insert:
(3) If, for a year or period which inclules, or for years or periods which together include, the whole of a chargeable accounting period of a trade or business carried on by a body corporate, the actual income of the body corporate from all sources is apportioned under or for the purposes of the said section twenty-one, and some (but not all) of the persons to whom the income is apportioned are individuals, then if by notice in writing given to the Commissioners within six months from the end of that chargeable accounting period, or such longer time as the Commissioners may in any case allow, the body corporate and the persons other than individuals to whom the income is apportioned jointly so elect as respects that chargeable accounting period and each subsequent chargeable accounting period the whole of which is included in a year or period or years or periods for which the said actual income is so apportioned to those persons and persons who are individuals, the provisions of this Part of this Act shall apply as if—

(a) the trade or business had been carried on, during that and each subsequent chargeable accounting period, in partnership by the persons to whom the income is apportioned, and the share of any one of them of the profits and losses of the trade or business therefor had been equal to the proportion of the income apportioned for the year or period or years or periods in question which is apportioned therefor to that one of them; and
(b) any payment which is received from the body corporate during that or any such subsequent chargeable accounting period by any of the persons to whom the income is apportioned, and which is not allowable as a deduction in computing the profits of the trade or business therefor, had not been made;
and the body itself shall not be chargeable to profits tax for that or any such subsequent chargeable accounting period.

This Amendment is rather formidable in appearance but it is not so formidable when one analyses it. It is designed to meet a suggestion made by hon. Gentlemen opposite during the Committee stage. Clause 25 excludes the provisions relating to Profits Tax from applying to partnerships. Subsection (2) of Clause 25 excludes its application to certain companies under the control of five persons whose income has not been distributed to a reasonable extent and, in accordance with Section 21 of the Finance Act, 1922, has been deemed to be the income of the members of the company. It excludes those companies in so far as the members of the company are individuals. The hypothesis is that really the income there is the income of individuals and not the income of a body corporate, and, therefore, the company in that case should not be within the scope of Excess Profits Tax. Hon. Gentlemen opposite, however, during the Committee stage of the discussions on this Bill pointed out that Subsection (2) does not really provide for the case where income is apportioned to the members of a company of that kind under Section 21 of the Finance Act, 1922, when members are not individuals but are bodies corporate themselves. The suggestion was made that that particular position ought to be dealt with because it was a gap in the drafting as it then stood.
This Amendment seeks to remedy that omission. It provides that where you have income apportioned to the Members of such a company, and some of the members are bodies corporate, the tax shall not apply to that company to the extent that its members are individuals and not bodies corporate. Really, it does justice in providing that, to the extent that the mem-


bers of the company are individuals, the Profits Tax provisions shall not apply to that company. It effects a division in that company between that part of it which is owned by bodies corporate and that part which is owned by individuals.

Amendment agreed to.

Further Amendment made: In page 23, line r, leave out from first "of," to "account," in line 3, and insert:
the last two preceding subsections to what persons income is apportioned."—[The Solicitor-General.]

CLAUSE 29.—(Meaning of "gross relevant distribution to proprietors.")

Mr. Peake: I beg to move, in page 25, line 31, after "distributions," to insert:
other than in respect of arrears of fixed preference dividends.
The House will recall that during the Committee stage when we discussed the Chancellor's new tax on distributed profits, it was pointed out on a number of occasions that the burden of the new tax fell entirely upon the ordinary shareholders. At that stage we sought to move Amendments to exclude from the computation of distributed profits amounts paid out by way of fixed preference dividends, that is, the dividends upon preference shares. We moved the Amendments for the reason that the object of the Chancellor's tax is declared to be to induce the ploughing back of money into the business and that if money were paid out by way of dividends, that object could not be achieved. However, we were unfortunate in our Amendments dealing with the elimination of the preference share dividends from the computation of tax liability, and here we are putting forward what is a very much smaller point but a case where real hardship will arise unless the Amendment is accepted.
There are a number of cases of concerns which have preference capital, and the dividends due upon that preference capital are in arrears. The share capital is what is known as cumulative preference capital, and arrears of dividend will have to be paid when the companies are in a position to pay them. Examples of such companies may be found in considerable numbers among the rubber producing concerns of Malaya and other parts of the Far East. Those companies have

been prevented by circumstances quite beyond their control from making profits during the war years and distributing them to the shareholders. A time will, however, come when they will again be making profits, and very considerable sums may be due to preference shareholders. If there was a 5 per cent. preference share and the dividends for six years were in arrears, it might easily occur that a 30 per cent. distribution had to be made at a single moment to the preference shareholders in order to make up for the lack of dividends from which they had suffered during the war As the matter stands, any distribution of that character by way of discharge of preference dividends will fall to be taxed under the Chancellor's proposal at the new rate of 12½ per cent. We think this is a distinct hardship and that the Chancellor ought to meet this very limited point.

7.45 p.m.

The Solicitor-General: I am sorry but I must again disappoint hon. Gentlemen opposite. I will endeavour to give the reason which, I think, will commend itself to them. It is true that during the war a number of companies were unable to earn profits and that substantial arrears of preference dividends must have accumulated in that case, but looking at the matter by and large, what is the position in the case where there is a distribution of arrears of preference dividends during the Profits Tax period? It is that it will be post-1946 profits. Profits earned after the end of 1946 will have made it possible for those arrears to be paid. That is a reasonably accurate description of the situation in general. If such companies are now paying arrears of preference dividends which have accrued during the war period or during the period up to the end of 1946, it is only because they have been able in 1947 and thereafter—in other words, during the Profits Tax period—to earn the profits with which to pay those arrears. I hope the House will think that that is reasonably accurate.
That being so, we feel that no real case can be made for differentiating the arrears of preference dividends from other distributions of income. The distribution is a distribution of profits earned during the Profits Tax period. This is a short answer but in our view it is an answer which should be regarded as conclusive We


cannot see that in equity a sufficient case has been made for saying that any exclusion should be imported into the Bill in the case of arrears on preference dividends. I am sorry to disappoint hon. Gentlemen opposite but for those reasons we feel we must invite the House to reject the Amendment.

Colonel Crosthwaite-Eyre: The Solicitor-General has gone nowhere near the root of what hon. Members on this side of the House try to do in this Amendment. He appreciates as well as I do the position of ordinary shareholders when preference dividends are in arrears. He said that many companies could not make sufficient money during the war to pay preference dividends. That is true, but I wish he had gone on to say that any company in that state is bound to be penalised in the postwar period and that before they can satisfy any obligations to their ordinary shareholders, they have, in the general run, to pay off those arrears of preference dividends. The Solicitor-General would be the first to admit that in nine out of 10 of the cases which we are now considering, it was no fault of the company concerned that they could not make money during the war. There were a thousand and one circumstances in which such companies could have been. They now want to get back on to a proper basis. They have the objections of all companies to this tax, but it is quite unfair to saddle them with this extra burden when they try to become—to use a phrase which has become so common—viable again, and to make up their arrears. They then find that this will be added to the burden they already have to bear. That seems to be quite unreasonable.
The Solicitor-General said that this could be paid only out of the profits made after 1946. That is quite true, but surely the continuity of policy in industry must mean that any Government, in framing legislation of this kind, must take into account the general over-all situation of industry. The only result of the stand the Government are taking is to make it more impossible for private enterprise to play its proper part in the reconversion from war to peace in this country. We are constantly told that effort is required and that private enterprise is the only barrier between this country and economic disaster. If that is so, surely the Government can help in a small matter like this?

They could at least see the justice of the claim that where arrears have been incurred by companies through no fault of their own, those losses might at least be offset without this additional penalisation. I can see no justice or equity in it. I cannot understand the argument of the Solicitor-General. It seemed simply to be that just because the profits are being made after a certain date, they must, therefore, be subject to this tax. If, as he said, he is thinking of equity, then surely he should be the first to make allowance for the company placed in this position whose one object is to get back on to a viable basis and to play its proper part in the industrial life of this country. I hope that the Government will think again about this matter.

Mr. Assheton: I listened very carefully to the argument put forward by the hon. and learned Gentleman, but I was not convinced that he has taken full account of one factor. It is that in the case of a distribution of this kind the directors of the company have no option but to pay the accumulated dividend on the preference shares which is in arrear. In a sense, therefore, it is particularly hard that they should be subject to tax on that account. That is an argument which I think has some basis, and it was not one which the hon. and learned Gentleman went any way to meet. I wonder whether he would perhaps be good enough to consider it and to say what he thinks of it?

The Solicitor-General: I had considered it and was aware of the point which the right hon. Gentleman makes. It is really a question of weighing up considerations and balancing one against the other. Taking account of the circumstances in which arrears of preference dividends are paid, we feel that the major factor which should influence our judgment in this case is that they are paid, albeit perforce, but for the greater part, out of post-1946 profits. Rightly or wrongly, we consider that that should be the prevailing consideration, and if that is right we feel we have no alternative but to say that those distributions should rank on exactly the same footing as any other distributions. For that reason, I am very sorry that after listening to the further arguments which have been adduced, I still do not feel in a position to alter my mind.

Amendment negatived.

The Solicitor-General: I beg to move, in page 26, line 7, after "exceed," to insert "an amount equal to."
This is a slightly technical Amendment which I will endeavour to explain in this way. Clause 29 (1, c) provides that in the case of the last chargeable accounting period in which a business or trade is carried on, the distributions to be taken into account for the purposes of Profits Tax are to include distributions made after the end of the period, which distributions are not distributions of capital. If one looks at the succeeding words in the Subsection, one sees what is to be taken as a distribution of capital for that purpose. Those words provide that for the purposes of (c):
distributions which are to be treated as distributions of capital shall not, in the case of distributions made by a body corporate with a share capital, exceed the total nominal amount of the paid-up share capital thereof.
That is as the Clause stands at present. During the Committee stage of our discussions the hon. Member for Chippenham (Mr. Eccles) made a suggestion with regard to that. I should like to take this opportunity of saying how exceedingly sorry I and all my hon. Friends are that he is not in his place so that I can address him personally. We hope that he will very soon be back. The suggestion he made was that the amount of the issue capital should be increased by the aggregate of the amount of the premiums paid in respect of shares issued in the case of a company which has issued shares at a premium for cash.
What we have done has been to say that the nominal amount of the capital is to be increased by that amount. In other words, that will reduce the amount pro tanto which is treated as a distribution for the last chargeable accounting period for the purpose of Profits Tax. We have sought to meet the point that was then advanced by the hon. Member for Chippenham, and supported by other hon. Gentlemen, including one of my hon. Friends, and we hope that the Amendment will be accepted as adequate for that purpose. There is another Amendment on the Order Paper. I cannot tell whether it will be called, but we feel that, having gone as far as we have done, and having met what we understand the suggestion to have been, we have adequately dealt with the position.

I accordingly commend the Amendment to the House.

Mr. Assheton: I am very much obliged to the hon. and learned Gentleman for the attention he has paid to the point made by my hon. Friend the Member for Chippenham (Mr. Eccles) and also for the kind remarks he made about the hon. Gentleman, whom we all hope to see back before long. I am not quite sure why the limitation has been made, as it is made here, to the case of shares issued at a premium for cash, because there must be occasions, at any rate, when shares have been issued at a premium for considerations other than cash. For example, let us take the case of arrears of preference dividends in a reconstruction scheme or something of that kind. If the hon. and learned Gentleman looks at it he will find that he will be unable to justify the words just as he has them here, including "for cash," if such a case is to be taken into account. It may be that the Amendment put down in the name of some of my hon. Friends is not quite perfect and could be improved upon, but I am sure that the idea is right, and that the hon. and learned Gentleman would be unwise to insist on the words "for cash" remaining in his Amendment. I am sure that there should be some other limitation.

The Solicitor-General: Very briefly, the answer to what has been said is that we have selected cash payments because we regard them as on a par with capital originally subscribed, as distinct from profits which have been capitalised, or arrears of preference dividends mentioned by the right hon. Gentleman, and so on. If they had not been distributed they would have qualified for the non-distribution relief and, therefore, if they are again aggregated to the capital so as to diminish the amount distributable in the last period for the purpose of Profits Tax, it will mean that they will get relief twice over.

Colonel Crosthwaite-Eyre: May I ask the Solicitor-General what happens if one goes a stage further and considers shares issued as a premium in exchange for giving up certain rights? That very often occurs and I should like to know what would happen in that case. That seems to me to be a very important point and one which we are trying to meet by our Amendment. If it means, in fact, that


this Clause will not cover this kind of case in which rights are surrendered as against the issue of premium, then there seems to me to he quite a large issue involved.

Amendment agreed to.

The Solicitor-General: I beg to move, in page 26, line 8, at the end, to insert:
together, where the body corporate has issued shares at a premium for cash, with the aggregate of the amounts of the premiums.

8.0 p.m.

Colonel Crosthwaite-Eyre: I beg to move, as an Amendment to the proposed Amendment in line 2 to leave out "for cash."
I shall now have to put my question to the Solicitor-General again. What will happen in a case where rights are surrendered as against the issue of premiums, as for example, in connection with an amalgamation? Would that case be covered under the Clause as it will stand?

Major Conant: I beg to second the Amendment to the proposed Amendment.

The Solicitor-General: The hon. Member has no doubt noticed that there is an Amendment on the Paper to deal with the case of bona fide amalgamations. In the case of shares issued at a premium in consideration of the foregoing of rights, and where that does not come within the meaning of the expression "cash," we feel that we have to draw the line somewhere. Therefore, we have sought to draw what we regard as an intelligible line of demarcation and of distinction. We have taken the original capital subscribed and added to it further cash subscribed. We regard that as being the appropriate measure for limiting distribution. If one goes beyond that, one gets into dangerous waters. We do not know where we might be led as a result. I justify the Clause by saying that we have sought to embrace that which we can easily demarcate. I hope that the House will think that is a satisfactory way, even if hon. Members do not think it is a perfect way, of dealing with it.

Mr. Assheton: I do not want to appear ungrateful to the hon. and learned Gentleman for the concession he has made, which I think is valuable and reasonable. I understand his difficulty about drawing the line, but I think he is drawing it in the wrong place. I hope that at some

time in the future he will take the opportunity of amending it.

Amendment to the proposed Amendment negatived.

Proposed words there inserted in the Bill.

The Solicitor-General: I beg to move, in page 26, line 16, at the end, to insert:
(3) Where the person carrying on the trade or business so elects by notice in writing given to the Commissioners within six months from the passing of this Act or such longer time as they may in any case allow, Subsections (1) and (2) of this section shall apply in relation to all chargeable accounting periods of that trade or business with the substitution for references therein to six months, of references to nine months, or, in the case of a company carrying on business or having interests abroad, twelve months.
This, again, is an Amendment to meet: arguments which were advanced by the hon. Member for Chippenham (Mr. Eccles). It deals with Subsection (2), which provides that dividends declared within six months are to be deemed to be distributions. It was felt that six months is not really long enough, even though there is power to extend the period. Therefore, in response to the argument advanced, we substitute nine months for six months, or, in the case of a company having interests abroad, 12 months, providing that the company so desires. It is given an option to elect. If it does so, then this longer period is substituted for the period of six months and then there is still a discretion.

Amendment agreed to.

The Solicitor-General: I beg to move, in page 26, line 29, after "that," to insert:
(i) where the amount of any class of paid up share capital on which dividends are expressed to be paid in respect of, or of any part of, the preceding chargeable accounting period is less than the amount of that class of paid. up share capital on which dividends are expressed to be paid in respect of, or of any part of, the succeeding chargeable accounting period, the dividends on that class of capital expressed to be paid in respect of, or of part of, the said preceding period shall, if the per. son carrying on the trade or business so elects, be treated for the purposes of this Subsection as correspondingly increased; and
(ii)
This Subsection deals with the case in which increased dividends are paid in respect of a period which falls wholly or partly after 1st January, 1947, when the dividends are declared after 15th April,


1947. It provides that in a case like that, inasmuch as the assumption is that by that time the proposal to introduce the Profits Tax must have been known, the dividends shall be treated as dividends of the period in which they are declared rather than of the period for which they are expressed to be paid.
The Amendment provides that in the event of the capital which is being used in the latter period being greater than the amount of capital which was used in the preceding period, the profits of the preceding period shall be deemed to be proportionately increased, with the result that the excess which, under Subsection (3), has to be treated as subject to Profits Tax, is proportionately reduced. The Amendment is to meet the argument which was adduced by hon. Gentlemen opposite to the effect that where the profits of the succeeding period were earned by an increased capital, the profits of the preceding period should be deemed to be correspondingly increased. The Amendment does a measure of justice.

Mr. Assheton: I am much obliged to the hon. and learned Gentleman for this Amendment, and for the previous Amendment to which we agreed.

Amendment agreed to.

The Solicitor-General: I beg to move, in page 26, line 41, after "that," insert
(i)".
This Amendment has to be taken with the Amendment which follows. It deals with another point which was raised by the hon. Member for Chippenham (Mr. Eccles) to the effect that Subsection (3) did not cover cases where the directors' decision had been publicly announced on behalf of the directors, but the dividend had not been declared in general meeting. It would cover the case of interim dividends, for example. The effect of the Amendment is that in that case the dividend shall not be treated as taxable in the year in which it is declared but in the year in which the decision is announced.

Amendment agreed to.

Further Amendment made: In page 26, line 46, at end, insert:
and
(ii) Where a dividend not so declared is paid in accordance with a decision of the directors, and that decision was, with their

authority, publicly announced at an earlier date, the dividend shall, if the body or society so elects, for the purposes of this section be treated as declared at that earlier date."—[The Solicitor-General.]

CLAUSE 30.—(Meaning of "distribution" and provision with respect to repaid loans.)

The Solicitor-General: I beg to move, in page 27, line 40, at end, to insert:
(4) Where—

(a) as part of a scheme of amalgamation or reconstruction a trade or business carried on by a body corporate (in this Subsection referred to as 'the first company') is transferred to another body corporate (in this Subsection referred to as 'the second company');
(b) the consideration for the transfer consists wholly or mainly of shares in the second company; and
(c) the first and second companies jointly so elect by notice in writing given to the Commissioners within six months after the transfer or such longer time as the Commissioners may in any case allow,
the provisions of this Part of this Act shall apply subject to the following modifications, that is to say—

(i) any distribution of those shares to any person in a winding up of the first company shall, notwithstanding anything in Subsection (1) of this Section, not be deemed for the purposes of the last preceding Section to be a distribution to that person; and
(ii) in considering what distribution charge, if any falls to be made on the second company, any difference on which non-distribution relief for chargeable accounting periods before the transfer was given to the first company or other person assessable to profits tax on the profits of the trade or business of the first company shall, except so far as it has already operated to increase a distribution charge on the first company, be taken into account as if it had been a difference arising in relation to the second company on which non-distribution relief had been given to that company, and shall also be taken into account, in the case of the last chargeable accounting period of the second company, so as to increase the amount which, for the purposes of paragraph (c) of Subsection (1) of the last preceding Section, is to be treated as not a distribution of capital."
This rather formidable looking Amendment is designed to meet arguments advanced by hon. Gentlemen opposite to the effect that where we have—I think this point was made by the right hon. Member for the City of London (Mr. Assheton)—a bona fide amalgamation, distributions of shares for the purpose of that amalgamation shall not be treated as distributions for Profits Tax. The Amendment provides accordingly that the


amalgamation must be a bona fide amalgamation. It must be part of a scheme for amalgamation for reconstruction carried out by a body corporate as a result of which the undertaking of the body corporate is transferred to another body corporate. It provides that a distribution of shares in liquidation resulting from such an amalgamation effected for the purpose of it, shall not rank as a distribution for the purpose of Profits Tax.

Mr. Assheton: I am very much obliged to the Chancellor of the Exchequer and to the hon. and learned Gentleman for this Amendment. It might easily have been the case that valuable amalgamations would not take place if this Amendment had not been made. This Amendment is of general interest, and it should be accepted by the House.

Amendment agreed to.

CLAUSE 32.—(Provisions as to subsidiary companies.)

The Solicitor-General: I beg to move, in page 29, line 3, at the end, to insert:
(3) Where—

(a) such a notice as aforesaid is in force; and
(b) the subsidiary to which the notice relates pays to the principal company an amount by way of reimbursement of profits tax which by virtue of the notice having been given is payable by that company for any chargeable accounting period ending after the thirty-first day of December, nineteen hundred and forty-six; and
(c) the principal company and the subsidiary jointly so elect by notice in writing given to the Commissioners of Inland Revenue within six months from the end of that chargeable accounting period or such longer time as those Commissioners may in any case allow,
the amount so paid, and any amount so paid in relation to a subsequent chargeable accounting period, by the subsidiary to the principal company shall for all the purposes of the Income Tax Acts be treated—

(i) as regards the subsidiary, as an amount of profits tax payable in respect of its profits arising in the chargeable accounting period of the subsidiary corresponding to the chargeable accounting period to which the payment relates; and
(ii) as regards the principal company, as reducing the amount of the profits tax payable by the principal company for the chargeable accounting period to which the payment relates."
This Amendment provides for the case where group treatment is opted for by a group of companies. It is optional for

the principal company to claim that Profits Tax be imposed on the group. If it does so, and charges out to the subsidiary companies part of the Profits Tax which accordingly has to be paid, as the law at present stands, there is no provision whereby the subsidiary company can use that Profits Tax charged out to it as a deduction for its own Income Tax. The Amendment seeks to provide that where such group treatment is opted for and the principal company charges out a proportion of the tax, as a consequence of having opted for group treatment, the subsidiary company shall be entitled to apply for the purposes of deduction for its own Income Tax the amount of Profits Tax which the principal company charges out.

Amendment agreed to.

CLAUSE 34.—(Nationalised undertakings.)

The Solicitor-General: I beg to move, in page 31, line 48, at the end, to insert:
Provided that where immediately before the acquisition of the whole or any part of any undertaking or any of the property thereof by any such Board, Authority, Commission, corporation or other body, the capital of that undertaking consisted wholly or partly of debentures, debenture stock or other loan capital, this Subsection shall not apply to so much of any of the payments therein mentioned relating to the acquisition as in the opinion of the Commissioners may be appropriate having regard to the extent to which the capital consisted of such capital.
This Amendment seeks to bring about an alteration in Clause 34—which deals with the liability to Profits Tax of nationalised undertakings—and provides that no deduction is to be made in respect of interest paid on compensation stock issued under the nationalisation scheme, or in respect of payments which are to meet the interest charge on Government compensation stock issued under such a scheme. The Amendment seeks to modify that provision of Subsection (3) of Clause 34 by providing that so much of such interest payments can be allowed as deductions as the Commissioners of Inland Revenue consider proper, having regard to the extent to which the capital of the undertakings taken over on nationalisation consisted, immediately before the acquisition, of loan capital. All nationalised undertakings are charged on the 5 per cent. basis, as there is no distribution charge, but as a compensating factor they are not allowed in computing their profits to deduct compensation pay-


ments. A slight alteration is made to that to provide that where a compensation payment takes the place of what was previously debenture interest, and, therefore, really a loan charge, the payment shall to that extent, as decided by the Commissioners of Inland Revenue, be a payment which can be deducted in computing the profits for the purposes of Profits Tax of the nationalised undertaking. We feel that that is a measure of justice.

Mr. Assheton: I have no comment to make on this Amendment, except that I was surprised when I first read the Clause that this was not provided for already.

Amendment agreed to.

CLAUSE 40.—(Interpretation of Part IV.)

8.15 p.m.

The Solicitor-General: I beg to move, in page 35, line 37, at the end, to insert:
(3) References in this Part of this Act to the personal representatives of a deceased person include references to trustees of the estate, or part of the estate, of that person.
This is a minor point, and is designed to meet an argument advanced by the hon. Member for South Hendon (Sir H. Lucas-Tooth). He pointed out that the words "personal representatives" were used in Clause 25 (1). He said that "personal representatives" was not an expression which was apt to describe the trustees of the estate of a deceased person. In pursuance of an undertaking which I gave that I would consider this matter further, we seek to provide, in terms, in the appropriate place, which is Clause 40, that references to the personal representatives of a deceased person shall include references to trustees of the estate, or part of the estate, of that person. It is little more than a drafting Amendment.

Amendment agreed to.

CLAUSE 41.—(Charge of additional duty.)

Captain Crookshank: I beg to move, it page 36, line 6, to leave out from "that," to the end of line 10, in page 37, and to insert:

"(a) the further duty shall not be charged on any legacy or succession given or created for public or charitable purposes, and
(b) in all other cases this section shall take effect in the case of legacy duty only where the testator by whose will the legacy is given or the intestate on whose death the legacy duty is payable dies on or after the sixteenth

day of April, nineteen hundred and forty-seven, and, in the case of a succession arising through devolution by law, only where the succession arises on or after that date, and, in the case of a succession arising under a disposition, only if the first succession under the disposition arises on or after that date."
As the House will remember, this Clause doubles the existing legacy and succession duties, but in doing so it breaks the precedent which was adopted on previous occasions when there was a change in these particular duties. It is a complicated Clause, and the object of this Amendment, as the House will see, is to remove most of it. The double rate of duty is to apply in a number of cases, all of which are specified in Subsection (3) at the bottom of page 36 of the Bill. Amongst other effects which this Subsection will have, if it remains as in the Bill, is that supposing a particular person died last year, and left a life interest to one person, and the remainder to another, and the first person is still alive, then the second person will, when the remainder falls in, have to pay the double duties. That, I am advised, has never happened before, so this Amendment seeks to insert into this Clause the language of the Act of 1909–10.
When these duties were increased under that Act, they were not charged at the increased rate in cases where the death had occurred before the time of the Budget. I do not quite understand why the right hon. Gentleman should have changed the plan on this occasion. I hope, therefore, that he will see that this is a right Amendment to make. I cannot think what arguments he will put up against it, because it follows precedent, and on the face of it seems to be eminently fair. After all, if the Government proposal is left as it stands, duty will have already been paid in many cases upon the capital value of the estate as a whole, owing to the time which has elapsed, and now, because the remainder man comes into his due portion, he will have to pay, quite unexpectedly, an enormously increased duty. That cannot be the right way of handling this problem. I suggest that the way we propose, the way in which it has been done in the past, is the right one.

The Solicitor-General: I am afraid that hon. Gentlemen opposite will think that I am becoming a little obdurate, because I feel that we cannot accept this Amend-


ment either. I will endeavour to state the reason why. Clause 41, as it stands at the moment, doubles the existing rate of Legacy and Succession Duty on certain legacies and successions. These really fall into two categories. One is legacies derived from a testator or intestate dying on or after 16th April, 1947, and on successions arising on and after that date. The other is legacies derived from a testator or intestate who died before 16th April, 1947, and successions created before that date, where the legacies or successions become chargeable with duty on deaths or certain other events which are specified in that part of the Clause which it is proposed to leave out. There are set out in the Clause certain events happening after that date which are to give rise to the result that the duty is to be doubled. What the Amendment would do would be to exclude from the scope of further duty all legacies and successions falling within the second category, that is to say, legacies or successions originating from a pre-April, 1947, death, if I may compendiously but perhaps rather disrespectfully so describe it. It would eliminate all those cases from the increased duties.
The reason why we feel that that proposal is not acceptable is that looking at the justice of the case—and it was really upon that footing that the right hon. and gallant Gentleman moved the Amendment—we think that the crucial fact or event which will determine whether the increased duty is or is not to be charged should be the fact which gives rise to the accretion to the wealth of the individual. That would be, in the second category of case, a post-April, 1947, event in connection with a pre-1947 death, if I may so describe it. We think that should be the crucial fact. To take an ordinary case, why should any particular individual who inherits, or comes into a legacy through succession, of £5,000, pay more or less according to whether his title was a pre-Budget or a post-Budget title? What should determine the rate of duty which he has to pay is the event which immediately gives rise to the fact that he becomes entitled to receive this £5,000. We feel that justice is on the side of the Clause as it stands at present.
In fact, the proposal would be a not altogether inexpensive one If accepted, it would cost the Exchequer something

like £1,500,000 which is not a very large sum but it is far from being a negligible sum. In our view the arrangement at present included in the Clause is the more equitable one. We feel that a case has not been made out for the alteration which the right hon. and gallant Gentleman suggests. Accordingly, I ask the House to reject the Amendment.

Sir H. Lucas-Tooth: I would like to take up the question of equity which has been raised by the hon. and learned Solicitor-General. He speaks as if all legacies were quite simple gifts direct from the testator or intestate as the case may be. Of course, that is not the position at all. Normally speaking, as the Solicitor-General knows very well, wills make fairly complicated provisions for payment. They usually provide that the legacy shall not be paid by the legator himself but out of the residuary estate. If the will is at all complicated, the incidence of the legacy may fall very heavily one way or the other. For example, we could take the case where a testator leaves the legacy to his wife or sister, or someone else, for the course of her life, and after that probably he would make some special provision. I will not take the case of children, because there the duty is small and it would not cause very much interference, but it might make a provision for a nephew or a niece for whom, for all practical purposes, he may have been a parent. The rate of duty in that case would be quite high. Suppose we get a testator with quite a small estate who has made provision for two or three nephews and nieces to give them a legacy in order to start them off in life, and then given the residue of his estate to some third person. It might be a charity or someone who was urgently in need of the testator's money.
As a residuary legatee, that charity or person will be liable to pay the entire amount on all the legacies for which the testator has made arrangements, and it may well be that, in some cases, it will virtually swallow up the entire residuary estate. I do not think that that is an equitable provision at all. It is true that, if the testator dies after the provisions of this Bill became known, he could, and no doubt would, take the opinion of his legal advisers and make alterations in his will to provide accordingly, but in the case where the testator died before this


Bill ever came forward he could not possibly have known of the circumstances. Although the total amount of £1,500,000 may not be much, it will probably fall, in a large number of cases, on people who were not intended to pay and whom the Government do not intend should pay it. I feel that this arrangement is entirely unfair
It will also be difficult to administer, and the Solicitor-General knows very well that the law regarding the payment of legacy duties is by no means lacking in complications. The provisions are extremely complicated, as we well know in the case of annuities. I think this alteration will seriously interfere with the administration of a large number of estates, and I think it is entirely contrary to precedent. I hope the Government, even at this late stage, will give some indication that they will look into the matter again.

The Solicitor-General: I am sorry to remain unconvinced, but I would answer the hon. Member for South Hendon (Sir H. Lucas-Tooth) in this way. Apart from the difficulty of working the tax, his case is that a testator who died before April, 1947, would not know what the future incidence of the tax or the increase of the tax would be. That is the case, but that case would apply in a number of other connections. It would apply to any increase or decrease of the Income Tax or Surtax which would fall to be borne by the present beneficiaries of an estate formed a long time ago—

Sir H. Lucas-Tooth: That is true, but it would fall equally on all the beneficiaries under the estate. The reason why this is inequitable is that it has been the almost invariable practice to arrange for the payment out of the residuary estate so that it will not fall on one particular beneficiary.

The Solicitor-General: I said that, in some cases it might fall in that way, and in a way in which the testator, would not desire it, but that equally applies to other obligations of taxes which, equally, could not have been foreseen by the testator, who might have died some time ago. I feel that that particular argument has no more force in connection with this type of tax than it has in connection with any other.

Amendment negatived.

CLAUSE 44.—(Transitional provisions as to compositions for transfers of stock, &c. and as to loan capital.)

Mr. Glenvil Hall: I beg to move, in page 41, line 10, at the end, to insert:
(5) Notwithstanding anything in the last foregoing Section, the duty chargeable on a conveyance or transfer on sale of any stock or marketable security, though first executed on or after the said first day of August, shall be the same as if this Act had not been passed, in any case where the Commissioners are satisfied either that—

(a) the instrument gives effect to a sale made before the said first day of August and does not give effect to a sale made on or after that day; and
(b) the instrument or the document of title to the stock or marketable security had to be sent to Great Britain from overseas;
or that the instrument, signed by or on behalf of the vendor or vendors, was lodged for certification before the said first day of August.
For the purposes of this Subsection an instrument sent by post for certification shall be deemed to be lodged on the day on which it is posted.
This Amendment modifies provisions of this Clause in so far as they relate to transfers of Stock Exchange securities. This Amendment was put down after consultation with the Council of the Stock Exchange to meet two points. The first is that transfers of stocks and marketable securities should be allowed to be stamped after 1st August at the old rate, if the Commissioners of Inland Revenue are satisfied in two particulars which are listed in this Amendment. The first is that the transfer gives effect to a sale made before 1st August, and does not give effect to a sale made after that date.
8.30 p.m.
Perhaps I might forestall a query by giving the reason why the last part of this Subsection is put in. It is put in to mee the case where a transfer may have been completed, so far as the vendor is concerned, but where the actual transferee, whose name appears on the transfer, was not the one to whom the vendor sold. Those familiar with the Stock Exchange know that these shares may change hands several times before settling day comes round, and it would clearly be wrong to let anyone who was not high enough on the list come within the ambit of what we think is fair, and what has, in fact, I understand, been agreed with the Stock Exchange Committee.
The second proviso deals with the transfer or the document of title which has to be sent here from overseas. It provides for the time lag of documents of title coming from, say, South Africa. Also embodied in this Amendment is the provision to see that, where certification has been held up, the transfer shall still go through at the old rate, if the delay has been caused by the company concerned and not by one of the parties to the transaction. I think that covers the two points we desire to see implemented in this Amendment.

Mr. Stanley: I have had occasion before, not to rebuke, but to warn the right hon. Gentleman and the Chancellor of the Exchequer against the, sometimes, undue influence which the Stock Exchange seems to wield in their affairs. There have been times when I have thought, and have said, that they seemed to shape the financial policy of the nation more for the benefit of the speculator on the Stock Exchange than for any other class. No doubt I shall have cause to make the same complaint in the future, but this is one instance where I think they have been right to listen to the Stock Exchange. I am always ready to give them praise where praise is due; I am also always equally ready to place blame where I think it is necessary, but, on this occasion, I should like to congratulate them on their concession.

Amendment agreed to.

CLAUSE 45.—(Savings for certain conveyances and leases.)

Mr. Glenvil Hall: I beg to move, in page 41, line 11, at the beginning, to insert:
(1) This Part of this Act so far as it increases any duty chargeable under or by reference to the heading 'Conveyance or Transfer whether on sale or otherwise,' the heading 'Conveyance or Transfer on sale,' or the heading 'Lease or Tack,' in the First Schedule to the Stamp Act, 1891, shall not apply in any case where the conveyance, transfer or letting is made or agreed to be made to a body of persons established for charitable purposes only or to the trustees of a trust so established:
Provided that no instrument not stamped with the duty to which it would apart from this Subsection be liable shall be deemed by virtue of this Subsection to be duly stamped unless it has in accordance with the provisions of Section twelve of the Stamp Act, 1891, been stamped with a particular stamp denoting that it is duly stamped.

The object of this Amendment is to exempt from the additional duties set forth in Clause 43, conveyances, transfers or leases to charities. Such documents will, accordingly, remain liable at the old rate, instead of at the new doubled rate as from 1st August. As the House will remember, when we were dealing with this matter in Committee, my right hon. Friend the Chancellor of the Exchequer, in response to pressure from various quarters of the Committee, agreed to see what he could do, when we reached the Report stage, to take out of the incidence of the new duties charities of one kind or another. That is what we are doing here. The word "charities" is used in the broad legal sense, and includes religious bodies.

Mr. Keeling: This Amendment gives effect to a promise which the Chancellor gave on an Amendment which I moved, and I should like to thank him for it. Perhaps I might be allowed to explain that this Amendment will exempt from the doubling of the duty, transfers to charities not only of land but of stocks, and it will be a very substantial advantage to charities. The Chancellor's original proposals in the Finance Bill are usually very harsh and hard, but I would like to give him credit for yielding to suggestions concerning charities.

Amendment agreed to.

CLAUSE 49.—(Charge of duty on bonus issues of securities, etc.)

Mr. Deputy-Speaker (Mr. Hubert Beaumont): It would be convenient to take the next two Amendments together.

Mr. I. J. Pitman: I beg to move, in page 44, line I, to leave out "bonus," and to insert:
capitalisation of profit balances otherwise distributable in dividend.
The purpose of this Amendment, and of the consequential Amendments, is to try to make clearer to the public and to everybody who has to read this Measure, the very complicated wording of the provisions of which Clause 49 is the first. This question of bonus issues has been full a misunderstanding. Even highly intelligent Members like the hon. Member for North Battersea (Mr. Jay) have found it extremely difficult to understand what a bonus issue is, and in one of his speeches the hon. Member clearly con-


fused it with a bonus payment. For that reason, if for no other, I think it is desirable to seek to improve the wording of this Clause and to make it clearer to the general public. Because of the way the Chancellor has confused the use of the word "bonus," there are good reasons why there should be in other quarters also much confusion in the word "bonus." To begin with, when we were discussing the Borrowing (Control and Guarantees) Bill both the Chancellor and the Solicitor-General sought to teach us that a bonus was a form of borrowing. Then in the Finance Bill, which came earlier, we were told, on the question of the repayment of E.P.T. and the purpose for which repayments of E.P.T. could not be used, that a bonus issue was a distribution by a company of its assets, and complicated Clauses were introduced to prevent bonus issues, because they were not apparently borrowing as in the other case but the exact opposite—distribution of assets. Finally, we now have it turning up neither as borrowing nor as distributing but as a mulch cow, or even possibly two mulch cows which ought not to be allowed but which are to be taxed. Could confusion be worse confounded.
We ought clearly to define in this Bill what we really mean by a bonus, so that it is perfectly clear what we mean in this Bill and, in particular, what is in fact the case that when a company pays bonus it will not come under the provisions of this Clause and will not because it pays a bonus be subject to tax. I believe that I have in this correctly stated the position—and, no doubt, the Chancellor will correct me if I am wrong. The position is—I will say it again—that if a company pays a bonus, no tax is to be levied under this Clause. The need for clearing up the meaning of "bonus" is surely obvious. Moreover, in support of my suggestion for abandoning "bonus" and preferring "bonus issue" I would point out that the heading of the Clause uses the words "bonus issues" correctly and not the incorrect word "bonus."
Moreover, it would be a very good thing if as well as using the correct description "bonus issue" we should in the initial stages define what a bonus issue is. If we wish to define it I think there can be no doubt whatever that what is meant by

a bonus issue is, in the words of the Amendment, "capitalisation of profit balances otherwise distributable in dividend." The purpose of this Amendment is therefore also to make that clear. In the House there has been great failure in understanding what the Clause is about. Even the Chancellor of the Exchequer has clearly misunderstood it. I have heard the hon. and gallant Member for Pollok (Commander Galbraith) rise from his seat and explode that the Chancellor of the Exchequer clearly did not know what a bonus issue was. This was when he talked of the reserves of the company being distributed as cash to its shareholders. I have also myself said and heard Members on this side saying that the Chancellor of the Exchequer is appealing to the ignorance of the extremists politically behind him.

Mr. Dalton: Very wrong.

Mr. Pitman: If it is wrong, then let the right hon. Gentleman put it right, by making it so clear in this Clause that even the ignorant cannot be misled into making a mistake. We on this side regretfully have accepted the tax. We are not here disputing the principle of this Clause, although we have, in earlier Debates, made it quite clear that we dislike it very strongly on many grounds. But what we are asking for is a small Amendment which will make it more clearly describe what the tax is. The Chancellor of the Exchequer was good enough to accept an Amendment to a Bill of his to change its title from Investment (Control and Guarantees) Bill to Borrowing (Control and Guarantees). By so doing he made the purpose of the Bill clearer to the public generally. The President of the Board of Trade has been equally obliging over the Industrial Organisation and Development Bill—adding the word "development." I ask the Chancellor of the Exchequer therefore confidently in this friendly atmosphere to give us this particular Amendment.

Sir H. Lucas-Tooth: I beg to second the Amendment.
I took some trouble to see if I could find whether there was any definite authority on the meaning of the word "bonus." It has, of course, been used before in Acts of Parliament, although I think they are limited to Acts passed


during the life of the present Parliament; and on the whole it has not been used precisely as it is here, where we are putting on a tax on a bonus issue. My hon. Friend the Member for Bath (Mr. Pitman) has explained—and I think that the Chancellor knows—that this is not a tax on a bonus, because the word "bonus," curiously enough, has been defined, and in the courts had been held to mean a cash bonus; and a gift of bonuses under a will was held to exclude bonus shares issued. In other words, if we are to use the word "bonus" without any trimmings at all, we mean cash issued by the company; and it is not such cash which these Clauses are seeking to tax.
It is, therefore, essential that we should use an expression which does really say what we are intending to do, and I think it is of some importance that the House should realise what a bonus issue really is. A great many hon. Members opposite imagine that a bonus issue is a thing which all members of a company are in the habit of praying for, and it will astonish them to hear that, in fact, a bonus issue of shares by a company requires a restrictive provision in the company's articles of association. The creation of a bonus issue is, first of all, the payment out of a cash bonus by the company, and then the taking of action under the company's articles to prevent the actual payment of the cash and, instead, to issue shares of the company to be paid for out of that cash. In other words, the creation of bonus shares is a restriction on the right of the shareholders and not anything in the nature of a gift. [Laughter.] I am confirmed in the views I hold by the laughter which comes from hon. Members opposite. It is perfectly plain they have been imagining a position such as I suggested. It may surprise them to hear that a bonus issue of shares is a restriction on the right of the members of the company. The wording suggested in the Amendment is the precise wording taken from the article which is put into a company's regulations in order to give it the power to create a bonus issue of shares. I think that we should in a taxing Measure of this sort use precise words which will indicate what is meant.

8.45 p.m.

Mr. Dalton: I am afraid that, whatever may be said on the merits of the argument, the words proposed by the hon. Member would, from the drafting point of view, not be appropriate. I cannot, in any case, accept this Amendment in the form in which it is put down. Apart from that, it is unsuitable for the further reason that it would limit the new duty which we are debating to what we have called in our previous discussions the pure bonus issue as distinct from the bonus element case. It is our view that this duty should fall on the bonus element case as well as on the pure bonus case—in the case where something is paid by the recipient of bonus shares in addition to the case where nothing is paid. In the case where nothing is paid, it is a pure bonus issue and in the case where anything is paid it is a bonus element issue. I think that the Amendment would not have that effect. The effect of the proposal would be to limit this duty to the pure bonus issue and to eliminate altogether the bonus element.

Mr. Pitman: I think the right hon. Gentleman is saying a half-truth. He is right in one respect that it would exclude the particular case of the company that issues its fully paid up shares at par without any capitalisation of profits. That is not a bonus issue and has no bonus element in it. It is a different mulch cow altogether. Within the terms of this Amendment, however, would be caught the company which was raising part of its fresh capital in cash and the other part by capitalising part of its hitherto undistributed profits.

Mr. Dalton: I agree with what the hon. Gentleman has said. This is a difficult and complicated matter, and we have tried to make sense of it in our proposals and to defend those proposals in the House. I think that hon. Members will agree that the effect of those proposals, apart from the drafting difficulties, will be considerably to limit the field of operation of this duty. I do not want to over-state and I want on this point to agree with the hon. Member if I can and to focus the issue. It would have the effect while not touching the incidence of the new duty on the pure bonus, of limiting considerably the field of operation of the duty as we have proposed it in the Bill as far as the bonus element issue is


concerned. I do not think the hon. Member would deny that.

Mr. Pitman: It would catch the pure bonus issues, and the part-bonus issues, which I call the bonus element, but it would not catch the issues where the full par value was paid for the share, but which, due to the fortuitous circumstances of the market, happened then to be at a high value.

Mr. Dalton: These matters will be discussed on various later Amendments, including the Amendment about the precise pre-estimate of what the cost of the duty will be to a company, and so on. I do not want to anticipate the later discussions. I merely say it is clear that the effect of the hon. Member's Amendment, drafting niceties apart, will be considerably to limit the field of operation of this duty, and for that reason I do not think we can accept it. In the case of the bonus element, there is, strictly speaking, no capitalisation of profits. The capitalisation of profits is a phrase properly applicable to the pure bonus tax. It applies in some degree to the case where some payment is made. Capitalisation of profits is primarily an operation applied in the case of the pure bonus issue.

Mr. Pitman: Mr. Pitman rose—

Mr. Deputy-Speaker: I would remind hon. Members that we are now on the Report stage, not on the Committee stage.

Mr. Dalton: I am subject to your Ruling, Mr. Deputy-Speaker. I am only anxious to get the matter clear as far as we can. I am anxious to see how far we can agree, and to find the exact point where we differ. This conception of the capitalisation of profits is primarily applicable to the pure bonus issue. Here we move on to the case of the bonus element where some, payment is made by the recipient.
The picture is a little smudged compared with the former case, where nothing is paid by the recipient. As I have said, I do not want to anticipate later discussions, but I had hoped that my acceptance of certain Amendments, particularly that which was moved by the hon. Member for Flint (Mr. Birch), where we are seeking to exclude relatively small accretions—5 per cent. is the figure—would go somewhere to meet hard cases. I do not expect the Opposition to agree, but I had hoped that my acceptance of that Amendment, and also the Amendment regarding amalgamations, would have removed a good deal of the sharp edge of opposition. This Amendment, drafting questions apart, does so far limit the field of operation of this duty that I cannot commend it to the House.

Question put, "That 'bonus' stand part of the Bill."

The House divided: Ayes. 251; Noes, 92.

Division No. 313.]
AYES.
[8.55 p.m.


Adams, Richard (Balham)
Brooks, T. J. (Rothwell)
Deer, G.


Adams, W. T. (Hammersmith, South)
Brown, George (Belper)
Delargy, H. J


Allen, A. C. (Bosworth)
Brown, T. J. (Ince)
Diamond, J.


Allen, Scholefield (Crewe)
Bruce, Maj. D. W T.
Dodds, N. N


Alpass, J. H.
Buchanan, G.
Donovan, T.


Anderson, A. (Motherwell)
Burden, T W
Driberg, T E. N


Attewell, H. C
Burke, W. A
Dumpleton, C W


Austin, H. Lewis
Butler, H. W (Hackney, S.)
Durbin, E F. M.


Awbery, S. S
Callaghan, James
Ede, Rt. Hon J. C.


Ayles, W. H.
Carmichael, James
Edwards, Rt Hon. Sir C. (Bedwellty)


Ayrton Gould, Mrs. B
Chamberlain, R. A
Edwards, John (Blackburn)


Baird, J
Champion, A. J
Edwards, W. J. (Whitechapel)


Balfour A.
Chetwynd, G R
Evans, S. N (Wednesbury)


Barstow, P G
Cocks, F. S.
Ewart, R


Barton, C.
Collick, P.
Fairhursl, F.


Battley, J. R.
Collins, V J
Farthing, W J


Bechervaise, A E.
Colman, Miss G. M
Fernyhough, E.


Belcher, J W
Cooper, Wing-Comdr. G.
Field, Capt W. J


Benson, G.
Corbet, Mrs. F. K. (Ca [...] N. W.)
Fletcher, E. G. M (Islington, E)


Bing, G. H. C
Corvedale, Vitcount
Follick, M.


Binns, J.
Cove, W. G
Forman, J. C


Blenkinsop, A
Daggar, G
Foster, W (Wigan)


Blyton, W. R.
Daines, P.
Gallacher, W


Bowden, Flg.-Offr. H. W.
Dalton, Rt. Hon. H.
Ganley, Mrs C. S


Bowles, F. G. (Nuneaton)
Davies, Edward (Burslem)
Gibbins, J


Braddock, Mrs. E. M. (L' [...] Exch'ge)
Davies, Ernest (Enfield)
Gibson, C W


Braddock, T. (Mitcham)
Davies, Harold (Leek)
Glanville, J E (Consett)


Bramall, E. A.
Davies, Hadyn (St. Pancras, S. W)
Gordon-Walker, P. C


Brook, D. (Halifax)
Davies, R J. (Westhoughton)
Grenfell, D. R.




Grey, C. F
Mallalieu, J P W
Skeffington-Lodge, T. C


Grierson, E
Manning, Mrs L. (Epping)
Skinnard, F. W.


Griffiths, D (Rother Valley)
Marshall, F. (Brightside)
Smith, C. (Colchester)


Griffiths, Rt. Hon. J. (Llanelly)
Medland, H M
Smith, H. N. (Nottingham, S.)


Griffiths, W. D (Moss Side)
Middleton, Mrs. L.
Smith, S. H. (Hull, S. W.)


Guest, Dr. L. Haden
Millington, Wing-Comdr E R
Sorensen, R. W.


Gunter, R J
Mitchison, G. R
Soskice, Maj. Sir F


Hale, Leslie
Monslow, W.
Sparks, J. A.


Hall, W. G.
Moody, A. S
Stamford, W


Hamilton, Lieut.-Col. R
Morgan, Dr. H. B
Strachey, J


Hannan, W. (Maryhill)
Mort, D. L
Stross, Dr. B


Harrison, J.
Nally, W.
Stubbs, A. E


Hastings, Dr Somerville
Naylor, T. E.
Sylvester, G. O


Henderson, A. (Kingswinford)
Neal, H. (Claycross)
Symonds, A. L.


Henderson, Joseph (Ardwick)
Nichol, Mrs M. E. (Bradford, N.)
Taylor, H. B. (Mansfield)


Herbison, Miss M
Nicholls, H. R (Stratford)
Taylor, R. J. (Morpeth)


Hobson, C. R.
Noel-Baker, Capt. F. E. (Brentford)
Taylor, Dr. S. (Barnet)


Holman, P
Noel-Baker, Rt. Hon P J (Derby)
Thomas, D. E. (Aberdare)


Holmes, H. E. (Hemsworth)
Oliver, G. H.
Thomas, I. O. (Wrekin)


House, G
Paget, R. T
Thorneycroft, Harry (Clayton)


Hoy, J.
Paling, Rt Hon. Wilt [...] ([...] worth)
Thurtle, Ernest


Hudson, J. H. (Ealing, W.)
Palmer, A. M. F.
Tiffany, S.


Hughes, H. D. (Wolverhampton, W.)
Pargiter, G. A
Timmons, J


Hutchinson, H. L. (Rusholme)
Parker, J.
Titterington, M. F.


Hynd, H. (Hackney, C.)
Parkin, B. T.
Tolley, L.


Irving, W. J
Paton, J (Norwich)
Tomlinson, Rt. Hon. G


Janner, B
Pearson, A.
Ungoed-Thomas, L


Jay, D. P. T
Peart, T. F
Viant, S P


Jeger, G. (Winchester)
Poole, Major Cecil (Lichfield)
Walkden, E.


Jeger, Dr S. W (St. Pancras, S..E.)
Porter E. (Warrington)
Walker, G H.


John, W.
Porter, G. (Leeds)
Wallace, G. D. (Chislehurst)


Jones, Rt. Hon A. C. (Shipley)
Price, M. Philips
Walkins, T E


Jones, D. T. (Hartlepools)
Prill, D. N.
Watson, W. M.


Jones, Elwyn (Plaistow)
Proctor, W. T.
Webb, M. (Bradford, C.)


Jones, J. H (Bolton)
Pryde, D. J.
Weitzman, D.


Keenan, W
Randall, H. E
Wells, P. L. (Faversham)


Kenyon, C.
Ranger, J
West, D. G.


Kinghorn, Sqn.-Ldr E
Rankin, J
Whiteley, Rt. Hon. W


Kirby, B. V.
Reeves, J.
Wilkes, L


Lavers, S.
Reid, T. (Swindon)
Wilkins, W. A.


Lawson, Rt. Hon. J. J.
Richards, R.
Williams, D. J. (Neath)


Leonard, W.
Ridealgh, Mrs. M.
Williams, J. L. (Kelvingrove)


Leslie, J. R.
Robertson, J. J. (Berwick)
Williams, Rt. Hon. T. (Don Valley)


Lewis, A. W. J (Upton)
Rogers, G. H. R.
Williams, W. R. (Heston)


Lindgren, G. S
Ross, William (Kilmarnock)
Willis, E.


Logan, D G
Royle, C.
Wills, Mrs. E A


Longden,
Sargood, R.
Woodburn, A.


Lyne, A. W
Scollan, T
Woods, G. S


McAdam, W
Segal, Dr. S
Wyatt, W.


McEntee, V. La T.
Shackleton, E A. A.
Yates, V. F.


McGhee, H. G.
Sharp, Granville
Young, Sir R. (Newton)


Mack, J. D.
Shawcross, C. N. (Widnes)
Zilliacus, K


Mackay, R. W. G. (Hull, N. W.)
Shurmer, P.



McKinlay, A. S.
Silverman, J. (Erdington)
TELLERS FOR THE AYES


Maclean, N (Govan)
Silverman, S S. (Nelson)
Mr. Snow and Mr. Popplewell.


McLeavy, F
Simmons, C J





NOES.


Amory, D. Heathcoat
Gammans, L. D.
Marshall, D. (Bodmin)


Assheton, Rt. Hon. R
George, Lady M. Lloyd (Anglesey)
Marshall, S. H. (Sutton)


Beechman, N A
Grant, Lady
Maude, J. C.


Bennett, Sir P
Gridley, Sir A.
Mellor, Sir J


Birch, Nigel
Harvey, Air-Comdre. A. V
Molson, A. H. E.


Bossom, A. C.
Hurd, A.
Morris, Hopkin (Carmarthen)


Bower, N.
Hutchison, Col. J R. (Glasgow, C)
Noble, Comdr. A. H. P.


Boyd-Carpenter, J. A.
Jarvis, Sir J
O'Neill, Rt. Hon. Sir H


Bromley-Davenport, Lt.-Col. W
Jennings, R
Orr-Ewing, I. L


Buchan-Hepburn, P. G. T.
Keeling, E. H.
Osborne, C.


Clifton-Browne, Lt.-Col. G
Lambert, Hon. G.
Peake, Rt. Hon. O


Conant, Maj. R. J. E
Langford-Holt, J.
Peto, Brig C. H. M


Cooper-Key, E. M.
Law, Rt. Hon. R. K
Pickthorn, K.


Corbett, Lieut.-Col. U. (Ludlow)
Linstead, H N.
Pitman, I J


Crookshank, Capt. Rt. Hon. H. F. C.
Lipson, D. L
Ponsonby, Col. C. E


Crosthwaite-Eyre, Col O. E.
Lloyd, Selwyn (Wirral)
Ramsay, Maj. S


Cuthbert, W. N.
Low, Brig. A. R. W
Rayner, Brig. R


Digby, S. W
Lucas-Tooth, Sir H
Reed, Sir S. (Aylesbury)


Dodds-Parker, A. D
Macdonald, Sir P. (I. of Wight)
Roberts, H. (Handsworth)


Donner, Sqn.-Ldr. P W
Mackeson, Brig. H. R.
Robinson, Wing-Comdr. Roland


Dower, Lt.-Col. A. V G. (Penrith)
Maclay, Hon. J. S.
Ropner, Col. L.


Drayson, G B
Macpherson, N. (Dumfries)
Sanderson, Sir F


Drewe, C.
Marlowe, A. A. H.
Shepherd, W S. (Bucklow)


Fletcher, W (Bury)
Marples, A. E.
Smiles, Lt.-Col, Sir W.


Fyfe, Rt. Hon Sir D. P. M
Marsden, Capt. A
Smith, E. P. (Ashford)







Spearman, A. C. M
Turton, R. H.
Williams, Gerald (Tonbridge)


Stanley, Rt. Hon. O
Wadsworth, G.
Winterton, Rt. Hon. Earl


Stoddart-Scott, Col. M
Walker-Smith, D.
York, C


Sutcliffe, H
Ward, Hon. G. R



Teeling, William
Wheatley, Colonel M. J.
TELLERS FOR THE NOES:


Thorneycroft, G E P. (Monmouth)
White, Sir D. (Fareham)
Mr. Studholme and


Touche, G C.
White, J B. (Canterbury)
Lieut.-Colonel Thorp.

Colonel Crosthwaite-Eyre: I beg to move, in page 44, line 15, at the end to insert:
(4) A company may deliver to the Commissioners a statement prior to issuing any securities or varying the rights or liabilities attached to any securities previously issued as mentioned in Subsection (1) of this Section together with a declaration that such proposed issue or variation of rights or liabilities does not contain any element of bonus as mentioned in that Subsection or an estimate of what in its opinion is the value of the bonus which would be likely to arise by reason of the proposed issues or variations of rights or liabilities in accordance with the principles of the next two succeeding Sections and on the receipt thereof the Commissioners shall soon as may be confirm the declaration or estimate or assess an alternative value of the bonus and if the company accepts the value so assessed by the Commissioners the duty charged by Subsection (2) of this Section shall be assessed in accordance with such confirmation estimate or assessment and no further claim shall be made on the company in respect thereof.
This Amendment is the same as one which was discussed during Committee. Briefly, its intention is to transfer from the company to the Government the responsibility for estimating the terms of the bonus issue or elements of bonus contained in an issue. I would remind the House that under the Clause as it stands at the moment, the company has all the responsibility for estimating the bonus element. It may well happen, as hon. Members know, that circumstances can alter. Technical modifications may happen or new discoveries may take place with the result that, however fair the terms may have been thought by the company at the time the issue was settled, when the rights of these shares become operative or within one month after the issue has been launched, the whole situation may be altered. Some bonus element never considered by the company will, in fact, be disclosed and the company itself will not have either the means or the available cash to meet the tax requirements of the Treasury.
Under the Stamp Act, 1891, it was clearly laid down that it was the responsibility of the Inland Revenue Commissioners to assess taxes. The Chancellor of the Exchequer, during the Committee stage, admitted that, and went on to say

that there was a gamble under the present proposal and that if that gamble were to be taken, he could not see any reason why the Inland Revenue Commissioners should be more capable of taking it than the companies. But it was this Government which laid down the gamble, and it is against the principle of this gamble we have expressed ourselves most vigorously from this side of the House. There is a gamble involved which no company can foresee, and if the Chancellor wants to prevent the gratuitous distribution of profits by a company to its shareholders, surely at least the additional undisclosed gamble, which this Amendment seeks to cover, must be the responsibility of the Government. If he is not willing to accept that responsibility, all those arguments he has advanced for the introduction of this tax must fall to the ground.
Towards the end of the Debate in Committee, the Chancellor of the Exchequer indicated that he would seriously consider this Amendment. I understood from what he said to my right hon. Friend the Member for the City of London (Mr. Assheton) that he was of opinion that this Amendment would guarantee certainty of revenue to the Treasury, and for that reason he was very inclined to accept it. I must admit for myself I was very surprised when I did not see an Amendment on the Order Paper at this stage to accept our principle. It seems to me that the Chancellor has set out to fulfil one object, to prevent the gratuitous distribution of profits to companies by their shareholders, and if that be so, he can accept this Amendment. At any given moment any company can assess the bonus element in or the bonus of the issue which it wishes to make. What it cannot do is foresee the future. If the Chancellor wishes to stop the gratuitous distribution of reserves to shareholders he can do it irrespective of this Amendment. If he refuses, it can only mean that he is seeking revenue without justification and placing a burden on industry which it is incapable of bearing. He is making them do something which he is unwilling to do for himself. It is for these reasons that I hope the Chancellor will find himself


able to accept this Amendment. It seems to be logically just and entirely in conformity with those principles which he has enunciated so often and so vigorously from the Front Bench opposite.

Mr. Birch: I beg to second the Amendment.
When it was moved in Committee, the Chancellor expressed some surprise that we should put it forward. Why he expressed that surprise I do not know, because one of the first principles of taxation is that it should be certain in its incidence, that is to say, someone should know when they undertake anything precisely to what tax they are liable. Under this Clause it is a pure guess, and what we are trying to ensure is that somebody, before he embarks on any transaction, will know for what he is liable. We say that it is wrong that somebody should have to gamble. Whether shares go up or down has practically nothing whatever to do with somebody who is issuing any particular security
For instance, supposing the other day somebody had been making an issue in connection with the oil industry. Knowing that the Chancellor of the Exchequer is against increases in dividends, it would have been surprising if he had guessed that there would be a sharp rise in the Anglo-Iranian dividend—a company which the Chancellor controls. It would be difficult to foresee that. The effect of that naturally would be to put up oil shares, and therefore somebody making an issue at that particular time would have been liable to a much heavier tax than he could have guessed, entirely because the Chancellor was doing something which no rational man could have assumed he would do. That clearly is wrong. There is no question under this Amendment of anybody trying to evade tax. As the Chancellor very well knows, on this side we hold it to be a thoroughly bad, stupid and foolish tax, and we are trying to mitigate to some extent the evil which is being done. We are not asking for any charge on the Revenue; we are only asking that a businessman should know where he is.

Mr. Dalton: When this matter was raised by the right hon. Member for the City of London (Mr. Assheton) I undertook to give it careful consideration and I have so done. The question is, what

is a reasonable function to place upon the Inland Revenue in this regard? It is quite true, as a general proposition, as the hon. Member for Flint (Mr. Birch) said, that so far as possible you should have complete certitude in advance as to what is the payment due to be made. There are, however, many taxes in the modern world of which we cannot say that. We are living in a world movement of prices, and so forth, and it is not in practice possible always to predetermine what the tax will be that we shall have to pay next year. Even our Income Tax next year depends on what we get this year.
The question, therefore, is who should try to fix this figure? I have carefully considered the suggestion that the Commissioners of Inland Revenue should be required to make a forward estimate of what prices would be in the event of a bonus issue and, consequently, on what basis the tax should be levied. I have great confidence, within their proper field, in the Commissioners of Inland Revenue; they are a very fine branch of the machinery of Government, but I have not been able to convince myself that they would be capable of performing this task, which is outside their field, with reasonable efficiency and, after carefully considering it, I do not think it would be fair to put it upon them.
9.15 p.m.
The Inland Revenue should not be asked to try to assess in advance factors of this kind which involve probable price movements following upon dividend declarations and the like. Inevitably there must remain some element of uncertainty. I do not see how we can in this, as in many other tax cases, assure ourselves with certainty of the result. If this task were put on the Inland Revenue, it would be possible to make a guess, but I do not think that we could feel that that guess would be nearer the truth than the guess which would be made in such a case as this by the company themselves before deciding whether or not to make a bonus issue.
We have debated bonus issues in general a great deal, and I have not concealed my opinion that bonus issues are not a necessary financial operation, except in very exceptional cases where it is reasonable that some payment should be made. If it be the case that my refusal of this Amendment—and I must refuse it—will be to


leave companies less ready to make such issues because they will be unable to estimate what the liability will be through the difficulty of estimating how the prices will move following the bonus issue, I should not think that an evil thing. On the contrary, although I would not get revenue because the issue would not be made, I would not feel that any disaster had occurred if the issue were not made owing to the difficulty of forecasting price movements; nor should I feel that any very serious setback had happened so far as our industrial development was concerned.
I would, therefore, not be moved in this case by the argument that leaving this uncertainty on the shoulders of the company rather than on the Inland Revenue might somewhat diminish the number of bonus issues made. On the other hand, although I am anxious to get the fullest service—as we do get it—from the Inland Revenue, I do not think it would be reasonable to ask them to undertake this additional function which falls quite clearly outside their ordinary duties. For that reason, I do not feel able to advise the House to accept the Amendment.

Mr. Stanley: The right hon. Gentleman has on this occasion fallen into an error which is not uncommon with him, that of thinking that two bad arguments make one good one. He started by addressing hon. Members on this side of the House in the most courteous and friendly way and telling them that he had looked with interest and sympathy at the Amendment and had gone into it with great consideration and found that it was impracticable purely from a point of view of machinery. That in itself was a bad argument. His argument was that we have here a tax which is bound to impose an element of uncertainty on someone and that the uncertainty should fall on the taxpayer and the gamble should not be taken by the Treasury.
On the contrary we feel that if the Government assume the responsibility of putting on a tax which is in itself a gamble, it is only right that the element

of uncertainty and chance should be assumed by the Department on whose advice the tax is imposed, and not by the unfortunate taxpayer. My hon. Friends have said that there is no attempt here, much as we dislike the tax, to provide that a man pays less in any particular case. It is only an attempt to see—all of us would recognise that this is a thing at which we should aim—that a man knows before he does a certain operation what tax he will have to pay in the long run as a result of it. Therefore, we think that the Chancellor's first argument is a bad one—that it is right that the element of uncertainty should be allowed to rest on the taxpayer and not be assumed by the Inland Revenue.

In order to bolster an argument which he himself recognised as of the lamest possible character, he went on to drop entirely the suavity with which he had opened the case and abandoned entirely all those thoughts about the difficulties of machinery and how much he would like to meet us if he possibly could. He simply went on to say, "Well, if it does make things difficult and unfair to the people who want to issue bonus shares and stops them from doing so, so much the better because, as the House knows, I do not like bonus issues. If that is his attitude why is he not honest about it and why does he not stop bonus shares? He has power to do so through the Capital Issues Committee and the whole elaborate machinery we spent months in debating last year. It is fantastic that he should first of all say that it is immoral to make bonus issues and then try to stop them, first by making them expensive and then by making them uncertain. It is for this reason that I accuse the Chancellor of the faulty arithmetic of adding together two extremely bad arguments and thinking that they make a good one. It is also the reason why we shall pursue the course at this stage—as I believe we did on the last—of dividing the House on the matter.

question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 92; Noes, 248.

Division No. 314.]
AYES.
[9.21 p.m.


Amory, D. Heathcoat
Bossom, A. C.
Buchan-Hepburn, P. G. T.


Assheton, Rt. Hon R
Bower, N.
Clifton-Browne, Lt.-Col G


Bennett, Sir P
Boyd-Carpenter, J A.
Conant, Maj. R. J. E.


Birch, Nigel
Bromley-Davenport, Lt.-Col. W.
Corbett, Lieut.-Col U (Ludlow)




Crookshank, Capt. Rt. Hon. H. F. C.
Lloyd, Selwyn (Wirral)
Robinson, Wing-Comdr. Roland


Crosthwaite-Eyre, Col. O. E.
Low, Brig A. R. W.
Ropner, Col. L.


Crowder, Capt. John E
Lucas-Tooth, Sir H.
Sanderson, Sir F.


Cuthbert, W. N.
Macdonald, Sir P (I. of Wight)
Shepherd, W S. (Bucklow)


Digby, S. W.
Mackeson, Brig H. R
Smiles, Lt.-Col. Sir W.


Dodds-Parker, A. D
Maclay, Hon J S.
Smith, E. P. (Ashford)


Dormer, Sqn.-Ldr. P. w.
Macpherson, N. (Dumfries)
Spearman, A. C. M.


Dower, Lt -Col A. V G. (Penrith)
Manningham-Buller, R E.
Stanley, Rt. Hon. O.


Drayson, G B.
Marples, A. E
Stoddart-Scott, Col. M


Drewe, C.
Marsden, Capt. A.
Sutcliffe, H.


Fletcher, W. (Bury)
Marshall, D. (Bodmin)
Teeling, William


Fyfe, Rt. Hon. Sir D. P. M
Marshall, S. H. (Sutton)
Thorneycroft, G. E. P. (Monmouth)


Gammans, L. D.
Maude, J C.
Thorp, Lt -Col R. A F.


George, Lady M. Lloyd (Anglesey)
Mellor, Sir J
Touche, G. C.


Grant, Lady
Molson, A. H. E.
Turton, R H.


Gridley, Sir A.
Morris, Hopkin (Carmarthen)
Wadsworth, G.


Harvey, Air-Comdre A. V.
Molt-Radclyffe, Maj. C. E.
Walker-Smith, D.


Head, Brig. A H
Noble, Comdr. A. H. P.
Ward, Hon. G. R.


Holmes, Sir J. Stanley (Harwich)
O'Neill, Rt. Hon. Sir H.
Wheatley, Colonel M. J.


Hurd, A.
Orr-Ewing, I. L.
While, Sir D. (Fareham)


Hutchison, Col J R. (Glasgow, C.)
Osborne, C.
White, J. B. (Canterbury)


Jarvis, Sir J
Peake, Rt. Hon. O.
Williams, Gerald (Tonbridge)


Jennings, R
Peto, Brig C. H. M
Winterton. Rt Hon. Earl


Keeling, E. H.
Pickthorn, K.
York, C.


Lambert, Hon. G.
Pitman, I. J



Langford-Holt, J.
Ponsonby, Col C. E.
TELLERS FOR THE AYES:


Law, Rt. Hon. R K
Raikes, H. V.
Mr. Studholme and


Lipson, D. L
Rayner, Brig R.
Major Ramsay.




NOES.


Adams, Richard (Balham)
Gallon, Rt. Hon. H.
Holmes, H. E. (Hemsworth


Adams, W. T. (Hammersmith, South)
Davies. Edward (Burslem)
House, G.


Allen, A. C. (Bosworth)
Davies, Ernest (Enfield)
Hoy, J.


Allen, Scholefield (Crewe)
Davies, Harold (Leek)
Hudson, J H. (Ealing, W.)


Alpass, J. H.
Davies, Hadyn (St. Pancras, S W)
Hughes, H. D. (Wolverhampton, W.)


Anderson, A (Motherwell)
Deer, G.
Hynd, H. (Hackney, C.)


Attewell, H. C
Delargy, H. J.
Irving, W. J.


Austin, H. Lewis
Diamond, J.
Janner, B


Awbery, S. S.
Dodds, N. N
Jay, D. P. T


Ayles, W. H.
Donovan, T.
Jeger, Dr S. W. (St. Pancras, S. E.)


Ayrton Gould, Mrs. B.
Driberg, T. E. N.
John, W


Baird, J.
Dumpleton, C. W.
Junes, D. T. (Hartlepools)


Balfour A.
Durbin, E. F. M.
Jones, Elwyn (Plaistow)


Barstow, P. G
Ede, Rt. Hon J. C.
Jones, J H. (Bolton)


Barton, C
Edwards, Rt. Hon Sir C. (Bedwellty)
Keenan, W.


Battley, J. R.
Edwards, John (Blackburn)
Kenyon, C.


Bechervaise, A. E.
Edwards, N (Caerphilly)
Kinghorn, Sqn.-Ldr. E.


Bellenger, Rt. Hon F. J
Edwards, W J. (Whitechapel)
Kirby, B. V.


Benson, G.
Evans, S. N (Wednesbury)
Lavers, S.


Bing, G. H. C.
Ewart, ft.
Lawson, Rt. Hon. J. J.


Binns, J.
Fairhurst, F.
Leonard, W.


Blenkinsop, A.
Farthing, W. J
Leslie, J. R.


Blyton, W. R.
Fernyhough, E.
Lewis, A. W. J. (Upton)


Bowden, Flg.-Offr. H. W.
Field, Capt. W. J.
Lindgren, G. S.


Bowles, F. G. (Nuneaton)
Fletcher, E. G. M. (Islington, E.)
Logan, D. G.


Braddock, Mrs. E. M. (L'pl, Exch'ge)
Follick, M.
Longden, F


Braddook, T. (Mitcham)
Forman, J. C.
Lyne, A. W.


Bramall, E. A.
Foster, W. (Wigan)
McAdam, W.


Brook, D. (Halifax)
Ganley, Mrs. C. S
McEntee, V. La T.


Brooks, T. J. (Rothwell)
Gibbins, J.
McGhee, H. G.


Brown, George (Belper)
Gibson, C. W
Mack, J. D.


Brown, T. J. (Ines)
Glanville, J. E. (Consett)
Mackay, R. W. G. (Hull, N. W.)


Bruce, Maj D. W. T.
Gordon-Walker, P. C
McKinlay, A. S.


Buchanan, G.
Grenfell, D. R.
Maclean, N. (Govan)


Burden, T. W.
Grey, C. F.
McLeavy, F.


Burke, W. A.
Grierson, E.
Mallalieu, J. P. W.


Butler, H. W. (Hackney, S.)
Griffiths, D. (Rather Valley)
Manning, Mrs. L. (Epping)


Callaghan, James
Griffiths, Rt. Hon. J. (Llanelly)
Marquand, H. A.


Carmichael, James
Griffiths, W. D. (Moss Side)
Marshall, F. (Brightside)


Chamberlain, R. A.
Guest, Dr. L, Haden
Medland, H. M.


Champion, A. J.
Gunter, R. J.
Middleton, Mrs. L.


Chetwynd, G. R.
Guy, W. H.
Millington, Wing-Comdr. E. R.


Cocks, F. S.
Hale, Leslie
Monslow, W.


Collick, P.
Hall, W. G.
Moody, A. S.


Collins, V. J.
Hamilton, Lieut.-Col. R.
Morgan, Dr. H. B.


Colman, Miss G. M.
Hannan, W. (Maryhill)
Morris, P. (Swansea, W.)


Cooper, Wing-Comdr. G.
Hardy, E. A.
Mort, D. L.


Corbet, Mrs. F. K. (Camb'well, N. W.)
Hastings, Dr Somerville
Nally, W.


Corvedale, Viscount
Henderson, A. (Kingswinford)
Naylor, T. E.


Cove, W. G.
Henderson, Joseph (Ardwick)
Neal, H. (Clayeross)


Crawley, A
Herbison, Miss M
Nichol, Mrs M. E. (Bradford, N.)


Daggar, G.
Hobson, C. R.
Nicholls, H. R. (Stratford)


Daines, P.
Holman, P.
Noel-Baker, Capt. F. E. (Brentford)







Noel-Baker, Rt. Hon P J. (Derby)
Segal, Dr. S.
Tolley, L.


Oliver, G. H
Shackleton, E. A. A
Tomlinson, Rt. Hon G


Paget, R T
Sharp, Granville
Ungoed-Thomas, L.


Paling, Rt. Hon. Wilfred (Wentworth)
Shawcross, C. N. (Widnes)
Usborne, Henry


Palmer, A. M. F
Shurmer, P.
Viant, S. P.


Pargiter, G. [...]
Silverman, J. (Erdington)
Walkden, E.


Parker, J.
Silverman, S. S. (Nelson)
Walker, G. H.


Parkin, B. T.
Simmons, C. J.
Wallace, G. D. (Chislehurst)


Paton, J. (Norwich)
Skeffington-Lodge, T. C
Watkins, T. E.


Pearson, A.
Skinnard, F. W.
Webb, M. (Bradford, C.)


Pearl, T. F.
Smith, C (Colchester)
Weitzman, D.


Poole, Major Cecil (Lichfield)
Smith, H. N. (Nottingham, S.)
West, D. G.


Porter E. (Warrington)
Smith, S. H. (Hull, S.W.)
Whiteley, Rt. Hon. W


Porter, G (Leeds)
Sorensen, R. W.
Wilkes, L


Price, M. Philips
Soskice, Maj. Sir F.
Wilkins, W. A.


Pritt, D. N.
Sparks, J. A.
Williams, D. J. (Neath)


Proctor, W. T.
Stamford, W.
Williams, J. L. (Kelvingrove)


Pryde, D. J.
Stross, Dr. B
Williams, Rt. Hon. T. (Don Valley)


Randall, H. E
Stubbs, A. E.
Williams, W. R. (Heston)


Ranger, J
Sylvester, G. O.
Willis, E.


Rankin, J
Symonds, A. L.
Wills, Mrs. E A


Reeves, J.
Taylor, H. B. (Mansfield)
Woodburn, A.


Reid, T. (Swindon)
Taylor, R. J. (Morpeth)
Woods, G. S.


Richards, R.
Taylor, Dr. S. (Barnet)
Wyatt, W.


Ridealgh, Mrs. M.
Thomas, D. E. (Aberdare)
Yates, V. F.


Robertson, J. J. (Berwick)
Thomas, I. O. (Wrekin)
Young, Sir R (Newton)


Rogers, G. H. R.
Thorneycroft, Harry (Clayton)
Zilliacus, K.


Ross, William (Kilmarnock)
Thurtle, Ernest



Royle, C.
Tiffany, S.
TELLERS FOR THE NOES:


Sargood, R
Timmons, J
Mr. Snow and Mr. Popplewell.


Scollan, T.
Titterington, M. F.



Question put, and agreed to.

CLAUSE 50.—(Special provisions as to issue of securities.)

Mr. Dalton: I beg to move, in page 44, line 38, at the end, to insert:
or, if the issue is made by way of bonus to members or debenture holders of a company other than that issuing the securities and forms part of a bona fide scheme for the amalgamation or grouping of two or more businesses including that of the other company.
I think this Amendment will be generally acceptable. It follows an undertaking given by my hon. and learned Friend the Solicitor-General in the Committee stage, and its purpose is to exclude from the additional charge of Stamp Duty company issues where the issue is made solely for the purpose of carrying out a bona fide amalgamation scheme. We have sought to put words on the Order Paper which will carry out the intentions of those who moved an Amendment on the Committee stage to this effect.

Mr. Assheton: I am much obliged to the right hon. Gentleman for moving this Amendment, which I think goes a long way to meet the point which was raised.

Amendment agreed to.

Mr. Assheton: I beg to move, in page 45, line 9, at the end, to insert:
Provided that this subsection shall not apply to securities issued under a Scheme of Arrangement to preference shareholders as consideration for relinquishment by them of rights to arrears of preference dividend.

This is a small, but, I think, a valuable Amendment, and I hope the Chancellor will be able to accept it. In schemes of arrangement it is quite often the case that shares of preference dividend are exchanged for a share in the equity. Such an Amendment as this would appear necessary, and I hope that it meets with the approval of the Chancellor.

Mr. Dalton: I am advised that this Amendment is unnecessary, and that the case which the right hon. Gentleman has put is one in which no tax liability would arise. If, however, it is desired to make the matter clear beyond a peradventure, I have no objection—although believing that it is unnecessary and would have no appreciable effect—to accepting the Amendment.

Amendment agreed to.

Mr. Dalton: I beg to move, in page 46, line 34, at the end, to insert:
(6) Notwithstanding anything in the foregoing provisions of this Section where securities are issued by way of bonus to members or debenture holders of a company, the value of the bonus as respects any of the securties shall be taken to be nil if, as determined in accordance with the said provisions, it does not exceed one-twentieth of the amount or value of the consideration received or receivable by the company issuing the security, other than any consideration such as is referred to in subparagraph (i) of paragraph (b) of Subsection (4) of this Section and any consideration consisting of a contingent liability attached to the security.


In determining for the purposes of this Subsection the amount or value of the consideration aforesaid, no deduction shall be made in relation to any liability to pay for the security or any liability attached to the security for the fact that the liability is prospective.
This Amendment gives effect to a promise made by me in Committee when an Amendment was moved by the hon. Member for Flint (Mr. Birch) to exempt very small bonus issues. I said then that I was prepared to look at the drafting of the Clause to see whether there could be any provision made to avoid very small bonuses being brought within the operation of the Clause. I dare say that 5 per cent. is a reasonable figure to indicate a relatively small bonus element which might be cleared. Having looked at the matter again, I am moving this Amendment, the purpose of which is to carry out that undertaking to clear quite small bonuses, defined as being within 5 per cent., from the operation of the duty.

Mr. Birch: It is right that we should say a word of thanks to the Chancellor in this matter. He has accepted what we put forward. Looking back at it, I am astonished at my own moderation in asking for such a small concession. As the Chancellor will appreciate, being himself an issuer of securities, it is the experience of issuing houses that stocks sometime move more than 5 per cent. from their issue price rather quickly.

Mr. Dalton: Up or down?

Mr. Birch: Though this concession does not meet our case on the main issue, I am obliged for it, so far as it goes.

Amendment agreed to.

Mr. Dalton: I beg to move, in page 47, line 25, to leave out "(6)," and to insert "(7)."
This Amendment is consequential on the Amendment I have already made to Clause 50, which cuts out bonus issues of the kind we have just considered.

Amendment agreed to.

CLAUSE 54.—(Relaxation of rules as to use of postwar refunds of excess profits tax in case of nationalised undertakings, &c.)

Mr. Glenvil Hall: I beg to move, in page 52, line 45, after "1945," to insert:
(except that, if an undertaking has been given in relation to the use of a sum representing any of the net amount of the refund in the trade or business of the subsidiary and Subsection (3) of this Section takes effect so as to

negative the operation of that undertaking as to that sum, the said references shall be construed as references to a part of the net amount of the refund equal to the said net amount recoverable less that sum).
The Clause to which this Amendment refers deals with refunds to nationalised undertakings. Some time ago my hon. Friend the Member for Chesterfield (Mr. Benson) put a question to my right hon. Friend the Chancellor of the Exchequer, asking him what the situation would be of a company which received refunds and had to plough them back into its undertaking, if that particular undertaking became nationalised. My right hon. Friend indicated that steps would be taken at the appropriate time, by legislation, to see that undertakings of that kind would be set free. By that he meant that they could share the amount which had come to them by way of E.P.T. refund on a liquidation of the particular concern.
The Clause itself deals with the three or four eventualities that could arise here. There is the case of a concern which receives the refund before it has been nationalised. There may be another company or group of companies which receives the E.P.T. refund after it has been nationalised. In that case, the refund can be distributed in just the same way as any refund can be distributed which had been paid before the undertaking had been nationalised.
Subsections (4) and (5) of this Clause deal with what I might describe as "splitting," where only one part of an undertaking has been nationalised or where, in the case of a group of companies, only one or two of the group are concerned. It is this last type of concern that we deal with in this Amendment. Where payments have been made on account of some of these concerns, the payments have been made to the parent company. The parent company can hold on to all the money or pass it on to a subsidiary at will. In some cases, of course, it may have passed to a subsidiary payments amounting to more than the subsidiary is entitled to, and the subsidiary is afterwards nationalised. We have no intention of interfering with a transaction of that kind. But what we feel that we must do is to safeguard the Exchequer from the obligation to release more than a due percentage of what is payable to a group of companies in respect of that part of the concern, or


group of companies which has been nationalised.
It is a rather complicated business, but I hope I have explained to the House just what we want to do by this Amendment. Really, we are tightening up the Clause because, as we see it, certain loopholes have become apparent. We think that we carry the House with us when we say we do not desire that money which is not due to the subsidiary which is to be nationalised should be paid without the usual undertakings.

Mr. Assheton: I do not know whether the hon. Lady the Member for the Exchange Division of Liverpool (Mrs. Braddock) entirely understood this point, but I certainly did not though I listened with a great deal of attention. Difficult as it was to understand at what the Financial Secretary was driving, it is much more difficult to understand what the words on the Order Paper mean. I weld like to direct the attention of the House to them for a moment. The Amendment says:
after '1945,' insert '(except that, if an undertaking has been given in relation to the use of a sum representing any of the net amount of the refund in the trade or business of the subsidiary and Subsection (3) of this Section takes effect so as to negative the operation of that undertaking as to that sum, the said references shall be construed as references to a part of the net amount of the refund equal to the said net amount recoverable less that sum).'
Honestly, Mr. Speaker, I think those words are as near nonsense as I have ever seen in any draft presented to this honourable House of Commons. I know the immense difficulties with which Parliamentary draftsmen are confronted when they have to put into a Bill an idea which is conveyed to them by the Chancellor of the Exchequer and his representatives. On this occasion, I can neither congratulate the Chancellor of the Exchequer and his advisers nor the Parliamentary draftsmen on the success which they have had in this particular case.

Sir Arnold Gridley: As one concerned with a company which, I think, may be affected by this, I would like to know what the Financial Secretary intended us to understand. I would like to know whether I understand it clearly. Suppose a holding company has certain undertakings that are to be nationalised but is left with others that are not to be

nationalised, and there is some refund of E.P.T. due to the group. Of course, we know that in the past E.P.T. has been allowed to be dealt with either by the parent company treating all the subsidiaries as one undertaking, or subdividing for the subsidiaries, each taking liability for a part. If I understood the Financial Secretary correctly, the position will be that, if there is an E.P.T. refund, that part of it which should go to the subsidiary undertaking that is being nationalised will accrue to the State on acquisition, but, in respect of the other subsidiaries not being nationalised, they will be entitled to their proper proportion of the refund. Am I correct in that interpretation of what the right hon. Gentleman said?

9.45 p.m.

Mr. Glenvil Hall: The non-nationalised undertaking will be held strictly to the undertaking which has been given to plough the refund back into its business. So far as the nationalised part is concerned, the percentage due to it will be available for distribution.

Amendment agreed to.

Further Amendment made: In page 53, line 5, at end, insert:
(except that if an undertaking has been given in relation to the use of a sum representing any of the net amount of the refund in the original trade or business and Subsection (3) of this Section takes effect so as to negative the operation of that undertaking as to that sum, the said references shall be construed as references to the net amount of the refund reduced as aforesaid and less that sum)."—[Mr. Dalton.]

CLAUSE 63.—(Short title, construction, extent and repeals.)

The Solicitor-General: I beg to move, in page 58, line 9, at the end, to insert:
and in all enactments relating to profits tax references to the Commissioners shall, unless the context otherwise requires, be construed as references to the Commissioners of Inland Revenue.
This is simply a drafting Amendment which makes it clear that in the enactments relating to Profits Tax in Part IV of the Bill the references to the Commissioners shall, unless the context otherwise requires, be understood to mean the Commissioners of Inland Revenue. It is really a drafting Amendment made necessary by the form of the Finance Act, 1937, and the Finance Act (No. 2), 1939.

Amendment agreed to.

Orders of the Day — NEW SCHEDULE—(Purchase Tax: Exemptions, and Reduction of Rates)

PART I.


CLASSES OF GOODS BECOMING EXEMPT, AND DATES FROM WHICH EXEMPTIONS OPERATE.


Classes of Goods.
Dates from which exemptions operate.


Domestic water filters designed to remove bacteria and other suspended impurities from drinking water by mechanical means, but not including filters also employing chemical reaction.
16th April 1947


Children's safety reins and children's safety harness.
10th July 1947


Thermostats.


Dustbins, buckets and pails and lids for any of those articles.


Projectors for sub-standard film, and lenses and other parts of, and accessories to, such projectors.


Appliances, apparatus, accessories and requisites for sports, games, gymnastics or athletics, not being mechanically operated articles, the following,—swings, slides (including water chutes), see-saws, roundabouts and giant strides.

PART II.


CLASSES OF GOODS BECOMING CHARGEABLE AT REDUCED RATE, AND DATES FROM WHICH REDUCTIONS OPERATE.


Classes of Goods.
Dates from which reductions operate.


Floor coverings, including linoleum, but not including the following articles—
16th April 1947.


(a) carpets, carpeting, mats and matting, being articles of textile material;


(b) rugs;


(c) wooden floor coverings.


Chambers not supplied as part of a toilet service, and chair pans and commode pans, and lids for such chambers and pans as aforesaid.


Hot water bottles of a kind designed for use as bed warmers or foot warmers.


Requisites for cricket of the following descriptions,—bats, balls, stumps and bails, and wicket-keepers' and batsmen's pads and gloves.


Footballs and parts of footballs, and footballers' shinguards.


Requisites for hockey, but not for ice hockey, of the following descriptions,—sticks, balls and shinguards.


Boxing gloves.


Rowing boats specially designed as racing boats.


Floor coverings of the following descriptions:—
10th July 1947


(a) rush, grass, raffia, straw or reed woven mats and rush, grass, raffia, straw or reed woven matting;


(b) woven mats and woven matting, being mats and matting whereof the warp or weft consists of tow of flax.


Requisites for shinty and hurley of the following descriptions,—sticks, balls and shinguards.


Requisites for lawn bowls of the following descriptions,—bowls and jacks


Requisites for lacrosse of the following descriptions,—crosses, balls and gauntlets.


Netballs.


Requisites for athletics, the following,—throwing hammers and handles therefor, regulation shot, relay batons, discuses, vaulting poles, hurdles, and javelins and heads and shafts therefor.


Inflatable leather balls made in panels or sections, and parts thereof.


Racing oars, spoon-bladed, not less than 12 feet in length.

PART III


CLASSES OF GOODS BECOMING CHARGEABLE AT BASIC RATE, AND DATES FROM WHICH REDUCTIONS OPERATE.


Classes of Goods
Dates from which reductions operate


Razor strops and razor sharpeners, but not including strops and sharpeners supplied as part of a toilet set.
16th April 1947


Dental sticks and toothpicks.


Reproductions produced in quantity for general sale, irrespective of size, and whether plain or coloured, of such pictures, prints, engravings and similar articles as were executed more than one hundred years before the date on which tax becomes due in respect of the reproductions.
10th July 1947


—[Mr. Dalton]

Brought up, and read the First time.

Mr. Dalton: I beg to move, "That the Schedule be read a Second time."
We here set out, for convenience, the Purchase Tax pages, which, of course, operate in two ways. There were, first, certain Purchase Tax changes which I proposed in the original Budget proposals, and there is a further group on which I accepted suggestions made in the course of the Debates. I do not know how far the House would desire me to go into detail, but, very broadly, the revised Schedule comprises first the Purchase Tax concessions announced in the Budget—and I do not think I need go into them—and then the further concessions announced on Report stage, except those on mirrors and gas and electrical appliances. These have been already dealt with in Amendments to Clause 6 and in the Third Schedule, where the 66i per cent. rate is brought into operation.
For the convenience of the House the Fifth Schedule has been entirely recast in order to present a complete picture of the concessions that we have made. The House will recall that at an earlier stage in the Committee proceedings, I accepted a number of suggestions including the exemption of children's safety reins, on the suggestion of the hon. Lady the Member for Norwich (Lady Noel-Buxton), who presented us with a very homely picture of one article that was taxed and one that was not, so that we decided to untax the children's safety reins. We have made changes with other items, but I think hon. Members will sufficiently recall the proceedings of the Committee, so I need not go into them in detail. Practically all the changes made are made it response to requests from the Committee, or are concessions to proposals which came from different parts of the House.

Miss Colman: I want to refer to two items in the new Schedule—rowing boats and racing sculls. I am very grateful to my right hon. Friend the Chancellor of the Exchequer for the concessions which he has made, but I want to ask him for more, and I have put down two Amendments to try to secure those concessions.
First, with regard to tub pairs, which are necessary for training for racing. The price of these boats at the present time is about £90 to £100, plus Purchase Tax, so

that a reduction in the rate of that tax would be a very considerable help to clubs which are trying to get going again after the war. I think that my right hon. Friend will say that the term "tub pairs" can be used to cover pleasure boats. I agree that it is very difficult to define the term more closely, but I have consulted experts who inform me that the term "tub pair" is not used for any other type of boat; the tub pair is much too uncomfortable to be used for pleasure purposes. Therefore, if my right hon. Friend should make the concession for which I am asking in regard to this item, I think he can be fairly satisfied that it will not apply to pleasure boats which he wants to exclude.
With regard to the racing sculls, I would like my right hon. Friend to reduce the Purchase Tax on them, as well as on racing fours. I would point out that racing sculls are quite as necessary as racing fours for rowing clubs. Again, I am informed by experts that racing sculls are tubular, and, therefore, cannot be used for pleasure boats, or, if they were, would be broken very quickly, and that owing to their cost it is extremely improbable that they would be so used. There, again I feel that my right hon. Friend can be fully satisfied that, should he make this concession on racing sculls, it will not be used to cover sculls which are used for pleasure boats. I hope, therefore, that he will say that he is prepared to make the concessions for which I ask.

Mr. Goerge Wallace: I would like to express my very grateful appreciation to my right hon. Friend the Chancellor of the Exchequer for the ready way in which he changed his mind over the question of children's playground equipment. We have now got complete exemption which will be an inspiration to many local authorities. Furthermore, I would like to express my appreciation for the relief of Purchase Tax granted, to a certain extent, in respect of sports equipments. Both these concessions will be of great help in the coming months to those for whom I spoke on the Committee stage, and I would like to express my pleasure that my right hon. Friend has been able to make these concessions.

Mr. Rankin: The new Schedule which my right hon. Friend


the Chancellor of the Exchequer has just moved is, with some additions, very like Part I of the Fifth Schedule to which Amendments have already been moved. While I quite appreciate that I cannot discuss the particular Amendment which I moved to the Fifth Schedule in the amended Bill, I would ask my right hon. Friend to give his very close and sympathetic attention to that Amendment.

Captain Marsden: I wish to support the hon. Lady the Member for Tynemouth (Miss Colman) in her remarks concerning tub pairs and racing sculls. Next year we shall have the Olympic games, and our crews will have to train very hard in order to put up a show. Deficient as we are in stamina, owing to the shortness or food, which looks like getting worse before it gets better, our men must make up for that by severe and intensive training. If we cannot train our men as well as those who come from overseas are trained, we may as well not enter these Olympic games at all. The hon. Lady has put up a very strong case, and I hope the Chancellor will meet it.

Sir P. Bennett: I would like to support the plea which has been made for extending facilities to boating, and I would confirm the hon. Lady's remarks that nobody would ever use these tub pairs for pleasure. The reason I rose was because during the Committee stage the Chancellor promised to look into the question of industrial gloves. As has been pointed out, industrial gloves are necessary for the safety of the worker, and we are anxious that there should be no hindrance to a continuation of the efforts to make more healthy those trades which are regarded as dangerous, by providing adequate protection. For instance, the handling of lead compounds can be made reasonably healthy if all precautions are taken, and among those precautions is an adequate provision of gloves. I understand there is in the Chancellor's mind some fear that people might use them for ordinary purposes. I can assure him that if he saw those gloves with "industrial" stamped across them, he would never fear that any of his lady friends would ask him to present them with a pair. If he cannot do this by inserting the appropriate words, I understand that it can be done by Order. I urge him to give attention to my request, because there is a growing desire

throughout the country to safeguard the health of the workers, and it is the little things of this description which help, just as much as the major measures.

Mr. Digby: During an earlier stage of this Bill, the Chancellor promised to look into the case of sports netting. As almost all the requisites for cricket and other sports were listed, it seems inconsistent, if one does not use the stronger word "nonsense," to leave out one item, namely, netting. He spoke of the difficulties with regard to specification and export, but I should like to hear whether he can do something about this matter, because it affects a very large number of schools and local authorities.

10.0 p.m.

Mr. Dalton: A number of points have been raised, and I will seek to deal with them briefly. I am very glad that I have been able to satisfy my hon. Friend the Member for Chislehurst (Mr. G. Wallace) in exempting from tax children's playground equipment. It will be observed that in the Schedule it is proposed to eliminate from tax altogether certain items which are used by children and also by adults. But I am glad he feels he has been reasonably dealt with in that regard.
With regard to the claims of the hon. Lady the Member for Tynemouth (Miss Colman) for tub pairs, I am in a certain state of doubt about how far I can go to meet her. I should like to go to meet her. The difficulty we have had is this. We have had to distinguish between business and pleasure throughout this consideration of athletic gear. I said at the beginning that I was anxious to relieve taxation on sporting and athletic gear used by active and vigorous people in the prime of manhood or womanhood, as the case may be, but not to the extent of including people just lazing about in backwaters in punts, and so on. That is sporting enough in a way, but it is not the same thing.
I have had last-minute consultations with my right hon. Friend, and what I should like to propose to the hon. Lady—I am very sympathetic with the hon. Lady—if she would be agreeable to meet me at the appropriate time and place to discuss further how we can devise this thing, is that it will have to be done in an Order. We cannot at this very late stage of the Finance Bill find a form of words to meet what we both want. But if she


will consult with me appropriately we will see if we cannot make an Order to do what she wants to do—and also what the hon. and gallant Gentleman the Member for Chertsey (Captain Marsden) wants to do—namely, to see that our Olympic oarsmen and others are not unduly handicapped through their sculls and other things needed for their training being overtaxed. I think we can probably find a way. Not tonight, because it is late, and we have not had time to go into it with the draftsmen. But I am desirous of doing it, and I will undertake to consult about it—we have all a common purpose—and to find what form of words we can to assist our own oarsmen at the Olympics without leaving the door open too wide and bringing in all sorts of pleasure craft, and so on. Therefore, I hope that the hon. Lady will not press her Amendment. With regard to the Olympics, I have clone my best as regards general releases. I have brought great pressure to bear on my right hon. and noble Friend the First Lord of the Admiralty, and he has succumbed to it, and we are going to have wood now to build boats for the Olympics.
With regard to industrial gloves, I want to find an appropriate definition, and I want my hon. Friend to help me in defining them. But I ask that this shall not be settled tonight. We shall make an Order later on, if we can find the right terms to deal with genuine industrial gloves without bringing in other things. That I will undertake to do.
The hon. Member for Western Dorset (Mr. Digby) has raised with me the questions of nets for football and cricket. I have gone into that carefully, but the difficulty is that once we get to ground equipment generally we have certain difficulties. I think it is very difficult at this stage. I hope it is only one stage, because I should like to go further into this field, because I am very sympathetic to the proposition that this sporting ground equipment should be, as far as possible, freed from all taxation. We cannot go so far as that tonight, but it is very difficult to extend this to ground equipment—

Viscount Hinchingbrooke: Will the right hon. Gentleman allow me?

Mr. Dalton: May I just deal with this? Then I shall be glad to give way. What I would like to suggest would be that for the moment we should leave this where it is, but I would be very willing to discuss with the hon. Member and others interested in this matter between now and next year. I will go into it sympathetically to see whether we may by Order give some slight extension to the Schedule which we have already embodied in the Bill. But I am advised that unless we are careful, we shall open the door to a very wide extension, which is not part of the hon. Member's purpose or of mine. I shall be glad to help in any way to meet him as reasonably as I can.
With regard to the suggestion of the hon. Member for Tradeston (Mr. Rankin) it is very difficult to name in this Schedule one particular mechanical griller. The hon. Member is interested in a particular mechanical griller, but it would be quite wrong to pursue further at this stage the question of a particular high-speed mechanical griller, I think that we ought to go into that a little more carefully, and perhaps my hon. Friend will have a word with me about it.

Mr. Stanley: I do not want to disturb the harmony which has been established between the right hon. Gentleman and the hon. Lady the Member for Tynemouth (Miss Colman), or to interfere with that assignation which has been arranged tonight. Nor have I any objection at all to the concession which has been promised for tub pairs. I was interested when the hon. Lady denied with vehemence that anyone used tub pairs for pleasure, because I cannot help wondering if they are not used for pleasure, for what reason they can be used.
I would ask the Chancellor of the Exchequer what is the line drawn by which certain Amendments and concessions in the Purchase Tax are put down in the Schedule of the Finance Bill, and certain others are to be done by Order at any time in the year. We have spent a great deal of time in the last few months discussing the Schedules to this Bill, and it would appear to the ordinary observer that that was the time and place in which Amendments were made to the Purchase Tax. Now the right hon. Gentleman has told us that as the Bill is in its penultimate state, he cannot make any more


changes in the Bill, out he can perfectly well provide for tub pairs and cricket bats by Order. Could not he have done everything else that is done in this Schedule by Order as well?

Mr. Dalton: It would have been very wrong.

Mr. Stanley: That is what I want to know. When is it wrong and when is it right? When is it right to do a thing only by Schedule of the Finance Bill, and when is it right to do it by Order at any other time in the year? I am inclined to agree with the right hon. Gentleman that the right time to do a thing of this kind would be in the Finance Bill of the year. On the other hand, we have this procedure which enables him to do it, although I agree with less publicity, at any time during the year. Would it not be preferable, therefore, to relieve our overladen financial discussions and to do it in the rest of the year instead of waiting for what appears to be the quite otiose procedure of the Finance Bill? It raises an interesting point to which I do not see the answer, but I should be obliged if the right hon. Gentleman would tell us the traditions on which he proceeds.

Mr. Dalton: By the leave of the House, I would like to answer the right hon. Gentleman. I think that it is a question of degree. I think that it would be very wrong, and I would not lend myself to such procedure, to make all these changes by Order. We have made a number of changes in connection with Purchase Tax this year, and I think that it would be very wrong to propose to the House that we should make all of these or the great majority of them by Order. I think that the procedure by Order should be the exception, and that the procedure in the ordinary course on the Finance Bill should be the regular rule. I think that the majority of changes should be made in the Finance Bill; but various considerations sometimes lead us to proceed by Order, and I will indicate two.
First, there are the suggestions made very late in our proceedings. There is this question of the tub pairs, which has come forward at the eleventh hour. I make no complaint about that, but we have not the time to go into it carefully, to see whether we can frame a definition

to achieve what my hon. Friend wishes, without opening the door to pleasure craft about which no one is very interested. The first consideration, therefore, is lateness of suggestions. The other is the difficulty of definition. We have had the suggestion made in regard to industrial gloves. There is great difficulty in framing a definition for industrial gloves, without opening the door very wide. I suggest that these are two sufficient criteria for the small minority of cases; firstly, where there are special difficulties of definition which experts ought to look into at more leisure, and, secondly, where last-minute ideas are projected into our discussions. I would propose that in the vast majority of cases we should seek to settle these matters in the Finance Bill.

Mr. John Foster: Does that mean that suggestions must be made during the course of the Debates on the Finance Bill?

Mr. Dalton: No, Sir.

Mr. Foster: Would the right hon. Gentleman accept suggestions made afterwards? The right hon. Gentleman has spoken of the lateness of suggestions. Is he empowered to put items within Purchase Tax by Order, and is he able, by Order, to restore Purchase Tax? Does he receive suggestions for that to be done.

Mr. Dalton: I think it would be a pity if we got into a habit of thinking that suggestions which are not made in the course of our lengthy and full discussions on the Finance Bill could reasonably be brought up later. I am only giving a rough indication, and in any case, all these matters are subject to the approval of the House. It would be a pity if hon. Members, with valuable ideas about Purchase Tax, withheld their suggestions, or did not think about them, during the Finance Bill, and only brought them up later. I should not like to lay down any absolute rule that I would not rule out any propositions in regard to Purchase Tax; but, in general, I think we ought to think about these things during the passage of the Bill.

10.15 p.m.

Mr. Stanley: I am still rather puzzled. Immediately we have finished with this, we are to discuss an Order to reduce or exempt the Purchase Tax which we were asked to agree to during the earlier pass-


age of the Bill. What is the reason these things are being done by Order, when all the others are being done by Amendment to the Bill? It certainly cannot fall under either of the reasons the right hon. Gentleman has just given.

Mr. Dalton: I suspect that I should not be in Order if I gave the grounds on which a further proposal in the Bill should be supported.

Captain Crookshank: May I put on record what my right hon. Friend omitted to say, that this Order comes into operation on 7th July. That is at the very moment when the Finance Bill is before

Orders of the Day — NEW SCHEDULE.—(Purchase Tax: Amendments of Seventh Schedules 10 Finance (No. 2) Act, 1940, and Finance Act, 1942, consequential on exemptions and reductions of Rates provided by Fifth Schedule.)

PART I.


AMENDMENTS CONSEQUENTIAL ON EXEMPTIONS AND REDUCTIONS OF RATES OPERATING FROM 16TH APRIL, 1947.


Amendments of Seventh Schedule to Finance (No. 2) Act, 1940.


Reference to place for making Amendment.
Amendment.


In the first column, the entry relating to carpets, rugs, mats, linoleum and other floor coverings
Substitute:— "Carpets, carpeting, mats and matting, being articles of textile material, rugs and wooden floor coverings."


In the second column, opposite the entry directed to be substituted for the entry in the first column relating to carpets, rugs, mats, linoleum and other floor coverings.
Insert:— "Floor coverings, including linoleum, but not including—



(a) carpets, carpeting, mats or matting, being articles of textile material;



(b) rugs;



(c) wooden floor coverings."


In the second column, opposite the entry in the first column relating to articles of china, porcelain, earthenware, stoneware, or other pottery ware.
Insert:— "Chambers not supplied as part of a toilet service, and chair pans and commode pans and lids for such chambers and pans as aforesaid."



"Hot water bottles 0! a kind designed for use as bed warmers or foot warmers."


In the second column, opposite the entry in the first column relating to appliances, apparatus, accessories and requisites for sports, games, gymnastics or athletics.
Insert:— "Requisites, for cricket, of the following descriptions,—bats, balls, stumps and bails, and wicket-keepers' and batsmen's pads and gloves."



"Footballs and parts of footballs, and footballers' shinguards."



"Requisites for hockey, but not for ice hockey, of the following descriptions,—sticks, balls and shinguards."



"Boxing gloves."



"Rowing boats specially designed as racing boats."


In the third column, after the entry relating to articles of china, porcelain, earthenware, stoneware or other pottery ware.
Insert:— "Domestic water filters designed to remove bacteria and other suspended impurities from drinking water by mechanical means but not including filters also employing chemical reaction"

the House. It is a very strange procedure. I think I can speak for a number of Members when I say that this whole method of dealing with Purchase Tax exemptions is very wrong from the Parliamentary point of view. We have had it again this year. Members of all parties have put forward all sorts of suggestions, and the Chancellor has added up the grand total and, after taking off a certain percentage, has distributed his favours afterwards. I hope that before next year he will think of a better and more satisfactory technique of imposing taxation.

Schedule read a Second time, and added to the Bill.

Amendment of Seventh Schedule to Finance Act, 1942.


Reference to place for making Amendment.
Amendment.


In the entry relating to toilet requisites.
After "of all kinds except," insert "dental sticks, toothpicks and", and after "razors and razor blades," insert "razor strops, razor sharpeners."

PART II.


AMENDMENTS CONSEQUENTIAL ON EXEMPTIONS AND REDUCTIONS OF RATES OPERATING FROM 10TH JULY, 1947.


Amendments of Seventh Schedule to Finance (No. 2) Act, 1940.


Reference to place for making Amendment.
Amendment.


In the first column, in the entries relating to projectors for sub-standard film and to parts of and accessories to cameras, enlargers and projectors.
Delete "Protectors for sub-standard film", and for "enlargers or projectors" substitute "or enlargers."


In the first column, after the entry relating to pencils, pens, &amp;c.
Insert:— "Reproductions produced in quantity for general sale, irrespective of size, and whether plain or coloured, of such pictures, prints, engravings and similar articles as were executed more than one hundred years before the date on which tax becomes due in respect of the reproductions."


In the second column, after the entry relating to floor coverings.
Insert:— "Floor coverings of the following descriptions:—



Rush, grass, raffia, straw or reed woven mats and rush, grass, raffia, straw or reed woven matting;



Woven mats and woven matting, being mats and matting whereof the warp or welt consists of tow of flax."


In the second column, after the entry relating to rowing boats.
insert:— "Requisites for shinty and hurley of the following descriptions,—sticks, balls and shinguards.



Requisites for lawn bowls of the following' descriptions,—bowls and jacks.



Requisites for lacrosse of the following descriptions,—crosses, balls and gauntlets.



Netballs.



Requisites for athletics, the following,—throwing hammers and handles therefor, regulation shot, relay batons, discuses, vaulting poles, hurdles and javelins and heads and shafts therefor.



Inflatable leather balls made in panels or sections, and parts thereof.



Racing oars, spoon -bladed, not less than 12 feet in length."


In the third column, after the entry relating to haberdashery.
Insert "Children's safety reins and children's, safety harness."


In the third column, after the entry relating to thermal insulating covers.
Insert "Thermostats."


In the third column, after the entry relating to hollow-ware of iron or steel.
Insert "Dustbins, buckets and pails and lids for any of those articles."


In the third column, the entry relating to projectors for slides.
Substitute "Projectors for sub-standard film or for slides (including projectors for film strips)."


In the third column, after the entry relating to passenger gliders.
Insert:— "Appliances, apparatus, accessories and requisites for sports, games, gymnastics and athletics, not being mechanically operated articles, the following,—swings, slides (including water chutes), see-saws, roundabouts and giant strides."

Amendment of Seventh Schedule lo Finance Act, 1942.


Reference to place for making Amendment:
Amendment.


The entry relating to pictures, prints, engravings, &amp;c.
At end add:— "but excluding reproductions, irrespective of size, and whether plain or coloured, of such pictures, prints, engravings and similar articles as were executed more than one hundred years before the date on which tax becomes due in respect of the reproductions."



[Mr. Dalton.

Brought up, and read the First time.

Mr. Dalton: I beg to move, "That the Schedule be read a Second time"
This Schedule is an attempt to meet requests put forward on an earlier stage of the Bill, and is another series of exemptions and reductions operating from 16th April and from 10th July.

Schedule read a Second time, and added to the Bill.

Orders of the Day — THIRD SCHEDULE.—(Purchase Tax—Intermediate rate.)

Mr. Glenvil Hall: I beg to move, in page 61, line 28, at the beginning, to insert:
Glass mirrors (whether framed or not), not being optically worked or specially designed for use with machinery, tools or instruments, and mirrors (whether framed or not) being toilet requisites and not being articles supplied as part of a toilet set.
We inserted in Clause 6 a reference to mirrors, and I informed the House then that we would have to make a consequential Amendment when we came to this Schedule which deals with the Intermediate Purchase Tax rate of 66⅔ per cent. My right hon. Friend undertook, at an earlier stage, to reduce the Purchase Tax on certain classes of mirrors in common use from 100 per cent. to 66⅔ per cent.

Amendment agreed to.

Mr. Glenvil Hall: I beg to move, in page 61, line 30, to leave out from "mains," to the end of line 36, and to insert:
of the following descriptions:—
Space heating appliances and apparatus, including appliances and apparatus of a kind used for boiling or cooking and also for space heating.
Instantaneous water heaters.
Immersion water heaters.
Storage water heaters.
Circulator water heaters for tank storage.
Water boilers for tank storage or central heating.

This Amendment implements an undertaking given by the Chancellor with regard to certain electrical and gas appliances which operate from the mains. The cost to the Revenue will be £12 million.

Brigadier Low: The Chancellor said that he would listen to further arguments and give further consideration to the question of water heaters. He will remember that in the short discussion we had on the last stage, I referred to instantaneous gas water heaters, and that he poured scorn on me because he did not think that any water heater was instantaneous. I was, of course, referring to that type of gas water heater which only uses gas when the water tap is turned on, except for the small amount of gas that is consumed by the pilot light I wish to put a few arguments to the Chancellor, so that he may perhaps fulfil part of his undertaking, if he has not been listening to the same sort of arguments in the interim. I want him to believe that those arguments are based on two points of view particularly. First, I am desirous of achieving as much fuel economy as possible; and, second—and just as important—I want this tax to be fair to all income groups. If the Chancellor took the Purchase Tax off the gas instantaneous water heater of the type I have mentioned to him, he would be being more fair to all income groups than he is by imposing a 66⅔ per cent. Purchase Tax. As a result of the Purchase Tax, orders for this type of heater, so I am instructed, have declined by about 75 per cent, since Budget Day. There can be no doubt that to put a Purchase Tax on such articles as these has had a definite effect.
This type of heater, with which many hon. Members will be familiar—though perhaps the Chancellor will not be familiar with it—is, I am told, installed in common form in practically every local authority house. [HON. MEMBERS: "No."] Hon.


Members dissent. Obviously there will be cases in which that is not so, but in general I think it is commonly found in local authority houses. [HON. MEMBERS: "No."] Well, I have seen a great many local authority houses which have them, and I am told that that is so. Therefore, this is of some importance in housing at this time. I imagine we are all agreed that whatever may or may not be a luxury, hot water is not one. And even right hon. Gentlemen opposite know the use of hot water.
There are, approximately, one million of this type of instantaneous water heaters in general use today. By using this type of water heater, it is estimated—and I believe the figures have been given to the Chancellor, so he can correct me if I am wrong—that in a family unit of four, in order to heat 150 gallons of water per week there is a saving of 45 lbs. of coal per week over the amount of coal which would be required to heat that amount of water per week for that sized family. The saving over a five months' period—which is that covered by the fuel economy period—amounts to a total of 440,000 tons of coal. [Laughter.] I am sure those figures are known to the hon. Member for Nelson and Colne (Mr. S. Silverman) who is finding them a matter of some merriment. At any rate, the figures prove that this would result in some fuel economy.
If the right hon. Gentleman does not take the Purchase Tax off this type of heater he will, of course, agree with me that it will not be bought by those in the lowest income groups, who will then be forced to heat their water in some other way. If they use coal, they will be using much more coal than would otherwise be used, over the whole country, if they had gas heaters. If they do not use coal but boil up the water on their gas cookers, they will still be using a great deal more gas than they would be using with this type of heater. For those two reasons—from the point of view of fuel economy, and in order that we may be fair to the lowest income groups—I beseech the Chancellor to reconsider this matter. If he does not agree with all the arguments I have put and those which will be put by others, I would ask him to go into this very carefully with those people who do know the true figures so that he may give a just decision.

Sir A. Gridley: I think the Chancellor of the Exchequer as a Member of the Cabinet will admit that the electricity supply industry of the country, whether run by companies or municipalities, is doing its best to co-operate with the Government in securing the greatest possible fuel economy at the present time. When we are short of coal and of generating plant, I am going to ask the right hon. Gentleman to reconsider the question of immersion water heaters. When we were discussing this matter before, he said it was not the economical unit that it was claimed to be, but I hope to convince him even at this late stage, that it really is, and that the industry itself is most anxious that the Chancellor of the Exchequer should meet it on this point, because there are certain fundamental reasons with which I think he will agree if he wants to assist in securing the maximum coal economy.
The use of this type of heater for warming water is about the most economical method at present available to the householder. I claim that the immersion heater when properly fitted into a tank with thermostat control and with the tank properly insulated, provides as near 100 per cent. efficiency as any piece of apparatus can do. The warm bath of normal temperature can be secured by a consumption of two or three units, at the average cost of somewhere between two-pence pence or 2½d., based on the price of current at the present time. If the bath water is to be obtained by burning coal, between 12 and 15 lbs. of coal would have to be used for the same purpose. To provide those two or three units needed to raise the water to the necessary temperature, would require only two or three pounds of coal in the generating station as against 12 to 15 in the ordinary range. The coal used in the power station is of no use for any other purpose. It is practically waste coal, and it could not be used for carbonising gas or raising the steam in any big works. It can only be used in boilers specially designed for burning this type of coal. There we have a definite economy.
I want to put another reason for this on behalf of the housewife. The Government, because they are compelled to do so, are imploring women to leave their domestic duties and go into the factories to work. Women will be encouraged to do that if the moment they get home, they


have available a hot water supply which will enable them to fill their kettles, boil the water in a minute or two on the gas ring and provide tea for the family. The housewife will have a tremendous advantage if she is allowed to have one of these immersion heaters installed in the water system. I think I have made out a really convincing case, one in which I honestly believe and which will persuade the Chancellor to meet us on this point. The House will agree that this is a matter that I can at least claim to know something about, through being associated with the industry in question.
10.30 p.m.
I heard an hon. Lady opposite say during the Committee stage that this type of apparatus was rather costly to use. That was because she thought that the charge for the units of electricity consumed amounted to a high figure, but I would ask anyone who makes that comparison to compare the cost with that of a ton of coal and with wood as fuel—if they could get it. Wood logs are running at £6 per ton. Electricity will have to go to a very much higher price than it is today, if it is going to compare unfavourably with the price of coal and the present cost of wood logs. Therefore, from the point of view of economy, and the point of view of coal economy, there is nothing which will secure hot water more cheaply than this method.

Mr. Mack: Before the Chancellor of the Exchequer gives a comprehensive reply, with his usual sympathy and understanding, I want to put before him a situation which possibly will not be in his mind. I am thinking in particular of a type of fireplace which is an assembly of articles used in the construction of working class homes and which includes not only the fireplace, but an electric fire, fire screen and guard. The total value of this article is in the neighbourhood of £18 and with the imposition of the 66⅔ per cent. Purchase Tax the price would shoot up to £30. This article is used not only in the design but in the construction of housing and is sold to builders' merchants and contractors. It would be impossible, at the price of £30, for it to be readily accepted in the construction of houses.
I do not know the proportion of deaths to children arising from fires. It is 30

to 40 years ago since fireguards were compulsorily introduced, but because of their unsightly appearance they are not generally used in the home today. This appliance would save the housewife a considerable amount of money. The electric panel might cost 30s. or £2 and that is taxable, while the other parts are not taxable. As the majority of the articles comprising this fireplace are nontaxable it seems rather unfortunate that the taxation should be imposed on the whole rather than on that part which is taxable. I would like the Chancellor to consider this point with a view to defining this matter clearly and unambiguously, particularly where this article is important to the housewife and the building of houses.

Viscount Hinchingbrooke: We had a fairly comprehensive discussion on the Committee stage and several hon. Members opposite, notably the hon. and gallant Member for Lichfield (Major Poole), expressed themselves very forcibly on the subject of immersion heaters. I know the hon. Member for West Ealing (Mr. J. Hudson) is against this. It looks as if he is about to speak. He told us that his own was very expensive. I told him then he ought to see whether he could not include it in something which would do better in the way of thermal efficiency.

Mr. J. Hudson: My own was not an immersion heater but a gas heater, and the interruption of the noble Lord had no reference to the heater to which I referred.

Viscount Hinchingbrooke: Immersion water heaters cover both types. We ought to get something from the Chancellor on this to justify the inclusion in this Schedule of immersion water heaters, after the Debate we had in Committee. He should tell us exactly what he complains about. Is it a question of coal? If so, the hon. Member for Stockport (Sir A. Gridley) has disposed of that. He has given examples showing that the cost of electric immersion heaters is far less that the relevant cost in the use of household coal. Is the right hon. Gentleman frightened of an electrical breakdown next winter? If that is the case, can he say that the addition of this tax to immersion water heaters will result in a diminution in the sales of electrical apparatus such as will relieve electricity


stations of a high proportion of their electrical output? Of course he cannot say anything of the kind. If fewer immersion heaters are sold between now and next Christmas, is it going to make a difference of a half a ton of coal—

Mr. Speaker: I understand we are to discuss coal on Thursday. I think the noble Lord might confine himself to electricity.

Viscount Hinchingbrooke: I was hoping to confine myself to electricity, which I think will be out of Order on Thursday.

Mr. Speaker: The noble Lord was getting near to being irrelevant.

Viscount Hinchingbrooke: I am much obliged for your Ruling, Sir. I was trying to point out to the Chancellor that this was purely an electrical question, and I think he ought to try to justify to the House, considering the elaborate Debate we had in Committee, when many Members of all parties expressed themselves against inclusion, the attitude he takes today. I do not believe that he can show that the sale—he has tried to stop the sale by adding Purchase Tax to them—of water heaters would result in a great expenditure of electrical energy or a great expenditure of coal. I think that the House, having regard to the interest in this matter of all Members in the Committee stage, is entitled to a fairly elaborate explanation.

Mr. Dalton: I am not going to be very elaborate at this time of night. I will try to give a reasonable and concise answer. The original proposal I made in the Budget Resolution was for a 66⅔ per cent. Purchase Tax on a very wide range of gas and electrical appliances. The matter was thereafter reconsidered, and by general agreement, I abbreviated that list and we have reverted to the pre-Budget status, which in some cases means freedom from tax altogether and in other cases a tax of 33⅓ per cent. In terms of taxation there are a large number of items indicated in the Schedule. On the other hand, there remains a residue of appliances—which do not, directly or indirectly, use a lot of fuel—which we have left unchanged. But I must ask the Committee to agree that, in the first case, space heaters and, in the second case, water heaters should remain in the Schedule. The reason why we have

selected them is not that we do not value hot water at the right time.
Having thought about this a good deal, I agree in principle, with the hon. Member for Stockport (Sir A. Gridley) in what he said, namely, that wisely used by the careful and economical housewife and householder, these water heaters can be economical; but because human nature is what it is, over a great range of instances they are capable of great waste. These would be difficult to bring into line; and I think it will be evident that we will have to effect a fuel economy publicity campaign. It is right in the national interests to do so for the months ahead, particularly when the winter comes around, and we will have to ask people to be very careful in the use of electric current, apart from solid fuel. We have given great attention to it. We think that water heaters ought to stand with space heaters, subject to the higher Purchase Tax. This will be an important indication when we come to our fuel ecoonmy campaign, that these are dangerous instruments in the hands of thoughtless and wasteful citizens. It is against those citizens that the public must be protected. I have listened to what the hon. Member for North Blackpool (Brigadier Low) and the hon. Member for Stockport had to say. We do not deny that some careful users may find an economical means of heating water by these heaters, but a large number of them on the market at the lower price would introduce into many homes what would be, in present circumstances, essentially wasteful implements. In view of the fuel shortage of which we are all deeply conscious, I must ask the Committee not to accept the proposal.

Brigadier Low: I would put this to the Chancellor: while the argument which he uses may be valid in the case of certain electrical appliances, would he explain how a careless person can use more fuel with a gas instantaneous water heater unless he has all his taps full on?

Mr. J. Hudson: I think that the Chancellor of the Exchequer is mistaken in the view that the water heater leads to carelessness. I am pretty certain that the gas ring or gas stove on which people will now heat water as they require it, is, in practice, quite as wasteful as and probably more wasteful than the water heater. I am sure that the Chancellor of the Ex-


chequer has not given adequate consideration to it. I feel he was misled partly by an hon. Gentleman on my own side of the House who quite mistakenly attacked me for my evidence regarding the matter, and I think that he really did not understand what we were discussing. The point I wish to make for the Chancellor of the Exchequer's consideration is this: that if you heat a gallon of water on an ordinary gas ring you require, in order to get it up to boiling point—and you can do it in four minutes on an average gas ring—2,700 thermal units. But if you use an ordinary instantaneous gas water heater you use only 2,000. Therefore the Chancellor and the Government are all wrong, and there is no saving of coal or gas by the change that they are now offering to us.
I have a still more serious objection to raise which I referred to last time this matter was discussed. You will be raising the rent of the new houses, by raising the rent of the water heaters that will be placed in them. About £2 10s. is the usual amount charged each year as rent for the water heater to be put into the modern house. That amount will be raised if the water heaters are still placed in the new house, and the total rent will be raised. The result would be that while the Government, on one hand, are doing their best to reduce the rents of the new houses by a subsidy, at great expense to the Chancellor of the Exchequer, on the other, they are whittling away that benefit by the proposal that is now made. While it is too late now—[HON. MEMBERS: "No."]. At any rate, it is my view after the consideration that has been given to this, that it is too late. I hope that during the year the Government will consider the matter again, because I am sure that, both from the point of view of fairness to working people, and from the point of view of fuel economy, it would have been better if the Chancellor of the Exchequer could have added this to the many other concessions—and I agree he has made many other concessions. I am thankful for them, but I believe my right hon. Friend has made a mistake with reference to the gas water heater.

Mr. Hurd: Having listened to this Debate, it still seems to me that the Chancellor of the Exchequer is out of date in the information on which he is

acting. Does he quite realise that to-day, when an electricity supply company puts in a water heater, it takes the greatest pains to ensure that it is so put in, and so protected, that the loss of heat is reduced to the barest minimum? I know that happened in the past and that it is the case today. I happen to know, because I had one installed only a fortnight ago, and it is packed round with cork. I want the Chancellor of the Exchequer to look at this from the point of view of food production. Does he realise that electricity supply companies are now serving a great many dairy farmers? The progressive, dairy farmer is, more and more, using immersion heaters for getting real heat. He must have them for sterilising his dairy equipment. Where that equipment is put in properly—and it is done by the electricity supply companies so that there is the least possible waste of heat—I suggest to the Chancellor of the Exchequer that this is a progressive move because, the Ministry of Agriculture and the Ministry of Food want to get more milk, and the milk provided must be clean. The Chancellor of the Exchequer could help farmers but they will be scared off by the extra cost if this proposal goes through.

Amendment agreed to.

Schedule, as amended, agreed to.

Orders of the Day — FOURTH SCHEDULE.—(Amendments of Purchase Tax enactments.)

Amendments made: In page 62, leave out lines 31 to 35.

In line 42, leave out from beginning to end of line 22, page 63, and insert:
in the entry relating to domestic cooking space heating and water heating appliances after the word "appliances," there shall he added the words "not being goods comprised in the list of exceptions set out at the end of this entry," and at the end of that entry there shall be added the words—
The list of exceptions above referred to
Domestic appliances and domestic apparatus, being appliances and apparatus of a kind suitable for operation from electric or gas mains of the following descriptions:—
Space heating appliances and apparatus, including appliances and apparatus of a kind used for boiling or cooking and also for space heating.
Instantaneous water heaters.
Immersion water heaters.
Storage water heaters.
Circulator water heaters for tank storage.
Water boilers for tank storage or central heating;


at the end of the entries relating respectively to furniture and component parts of furniture, to cupboards, dressers, draining boards and similar articles, and to fireguards, there shall be added the words "but not including goods comprised in the list of exceptions set out at the end of the entry in this column relating to domestic cooking, space heating and water-heating appliances.

In page 63, line 33, at end, insert:
4. In the Seventh Schedule to the Finance Act, 1942,—
the entry relating to glass mirrors shall be deleted;
in the entry relating to toilet requisites, there shall be added in the exceptions after the word "towels," the word "mirrors." [Mr. Glenvil Hall.]

Orders of the Day — FIFTH SCHEDULE.—(Purchase Tax—Exemptions and reductions of rates.)

Amendment made: In line 34, to leave out Schedule 5.—[Mr. Glenvil Hall.]

Orders of the Day — SEVENTH SCHEDULE.—(Computation of profits, etc., for purposes of the Profits Tax.)

The Solicitor-General: I beg to move, in page 75, line 16, at end, to insert:
Provided that if the person carrying on the trade or business so elects as respects any payment or payments to which paragraph (iii) of sub-paragraph (a) of this paragraph applies and as respects which the conditions specified in this paragraph are fulfilled but as respects which an election under paragraph (ii) of the proviso to Subsection (1) of Section twenty-three of the Finance Act, 1943, has not been made, the like consequences shall follow under this paragraph as would have followed thereunder it such an election had been made (and, in a case in which there was not in fact a right to make such an election, if there had been such a right).
This is a slightly complicated Amendment which is designed to meet the point made during the Committee stage by the hon. and gallant Member for New Forest and Christchurch (Colonel Crosthwaite-

54 &amp; 55 Vict., c. 39.
The Stamp Act, 1891.
In section eighteen the words "court, inn"; section twenty-one except as respects persons admitted as members of one of the Inns of Court in England before the passing of this Act; section twenty-six; in the First Schedule, the first, third, fourth, fifth, sixth and seventh of the headings relating to "Admissions," and the headings "Commission to act as a notary public in Scotland," "Faculty, Licence, Commission or Dispensation," and "Licence to act as a notary public."


63 &amp; 64 Vict., C. 14.
 The Colonial Solicitors Act 1900
In section one the words "stamp duties and."

This and the succeeding Amendment in line 38, deal with the same matter They make Amendments in the repeal Schedule, which are consequential on the new Clause dealing with the duties on admission as

Eyre). He complained that the Bill as it stood dealt unfairly with schemes under which payments were made for back services. Under the provisions of Section 23 of the Act of 1943 and the Seventh Schedule of that Act, where you have a payment made in respect of back services during the Excess Profits Tax period, you can either have the payment disallowed as a deduction, or you can have one of two options. One option is to have the payment spread back over periods in the past, during the period in which the back service was rendered, and treated as payment in those periods. The other option is to have the back payments spread forward over 20 years. The second option is only available in the case of payment made for back service when these payments were made before 1943. The point made by the hon. and gallant Gentleman during the Committee stage, was that it is not justifiable now that that forward-spreading option should exist only in the case of payments made before 1943. This Amendment says that that option to spread forward shall be available, not only in the case of pre-1943 payments, but also in the case of post-1943 payments made during the Excess Profits Tax period.

Colonel Crosthwaite-Eyre: I would like to thank the hon. and learned Gentleman for introducing this Amendment, which I think covers a real deficiency in the Bill, as it existed before, in the case of payments for back service before 1943.

Amendment agreed to.

Schedule, as amended, agreed to.

Orders of the Day — TENTH SCHEDULE.—(Enactments repealed.)

The Solicitor-General: I beg to move, in page 89, line 34, at end to insert:

a barrister or solicitor, on articles of clerkship, and on practising certificates.

Amendment agreed to.

Further Amendments made: In page 89, line 38, at end, insert

22 &amp; 23 Geo. 5, c. 37.
The Solicitors Act, 1932.
In subsection (1) of section thirty-five, the words "stamp duties and."


23 &amp; 24 Geo. 5, c. 21.
The Solicitors (Scotland Act, 1933.
In section seven the words "stamp duty and"; in section fourteen the words "and shall be stamped with the stamps required by law to be impressed on the admission of solicitors"; in subsection (2) of section seventeen the words "on his paying the stamp duty for the time exigible by law from a notary public on admission"; in section twenty, in subsection (1) the words "who has paid the stamp duty exigible by law on admission to practice as a solicitor before the Court of Session," and in subsection (2) the words "who has paid the stamp duty exigible by law on admission to practice as a solicitor before a sheriff court"; and section twenty-three

In page 90, line 23, column 3, at beginning, insert:
In Section five, as from the first day of January, nineteen hundred and forty-eight, Subsection (1)."—[The Solicitor-General.]

Schedule, as amended, agreed to.

Bill to be read the Third time Tomorrow.

Orders of the Day — PURCHASE TAX EXEMPTIONS (WOVEN FABRICS)

10.56 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): I beg to move,
That the Purchase Tax (Exemptions) (No. 1) Order, 1947 (S.R. &amp; O., 1947, No. 1255), dated 23rd June, 1947, made by the Treasury under the Finance (No. 2) Act, 1940, a copy of which Order was presented on 30th June, be approved.
The woven fabrics defined in the Schedule to this Order are commonly used as equipment for industrial processes. The Select Committee has had this Order under review and has decided that the circumstances did not warrant their making any special report on it to the House. The only point which might possibly arise came up during our discussions on the Finance Bill about an hour ago. Very properly the question was put by the right hon. Member for West Bristol (Mr. Stanley) to the Chancellor as to why this was not included in the Finance Bill with which we have just been dealing. The short answer, which I am sure will satisfy hon. Members opposite, is that this matter is somewhat technical, and if a matter of this kind is put into the Finance Bill it has to be done without spreading too widely the fact that it is about to be done. It was essential in this case, as the matter was technical and the fabrics were to be used for industrial purposes mainly in connection with some special class of machinery, to consult the trade concerned and give it an opportunity to express its

views. Members of the trade have been helpful in framing the definition which has been put into the Schedule, and that is the reason why my right hon. Friend has proceeded by way of Statutory Rule and Order rather than by putting this in one of the Schedules to the present Finance Bill. The loss to the revenue will be something in the nature of £70,000 a year.

10.58 p.m.

Captain Crookshank: I cannot think that anybody would be satisfied with the substance of the explanation of the right hon. Gentleman as to why this goes in an Order. Earlier we asked the Chancellor what was the dividing line between an Order and the Schedule of the Finance Bill, and he said either because it was too late—that was the reply he gave to the hon. Member for Tynemouth (Miss Colman)—or else it was too difficult to define; therefore, it was quite in order to put down this Order. I think we are entitled to protest against this—and I hope the right hon. Gentleman will not take exception to it—for this reason, that the Order was dated 23rd June and comes into operation, if passed, on 7th July. The 23rd June was during the long interval which very properly elapses between the Committee stage and the Report stage of the Finance Bill. That was the time when the right hon. Gentleman was considering with his officials and colleagues, as he has told us, all the changes he was going to make with regard to the Purchase Tax, and the outcome of those deliberations has been the subject of our talk for an hour or so tonight. He could not have failed, so far as we can see, to bring this matter forward in some sort of way.
If, in order to make the matter clear, I may refer back to the new Schedules we have just inserted into the Finance Bill. I would point out that there is in the first


new Schedule a list of classes of goods to become exempt, and the dates at which they are to become exempt. Amongst that list there are ten lines describing the articles, and the dates from which they are to be exempt, 16th April and 10th July, 1947. These exemptions are at a date prior to that. There is no difficulty about the date. Even more strange, of course, is that the second new Schedule we inserted tonight into the Finance Bill amends the Seventh Schedule to the Finance (No. 2) Act, 1940. That is exactly what this Order does. This makes the Amendments to that Schedule quite incomprehensible to me. Why, when he was going to put a long list of Amendments into the Bill, could he not deal with this thing in that way?
The right hon. Gentleman's excuse is that this was somewhat technical, that they had to consult the trade and ask them to express their views, which they were good enough to do. That is all right. There is no reason in the world why a somewhat technical matter, after consultation, should not go into the Finance Bill at the Report stage. On this Finance Bill there have been consultations, during that interval between the Committee stage and the Report stage, with all sorts of people about all sorts of subjects. Four admirable new Clauses took the place of four bad ones as the consequence of consultations on one group of subjects. Certainly, I could not have approved if the right hon. Gentleman had said he had consulted nobody at all about any of these Purchase Tax changes, but I imagine he must have had conversations in order to make them, and—as I think he said in an earlier speech—in order to exempt the right things. While there were consultations—if not this year, there must have been consultations in general about these subjects, technical subjects, which have come into the Schedule—why on earth he could not have had them about this particular type of woven fabrics, in sufficient time to insert this in the Finance Bill, I do not know.
While there is no reason from our point of view why we should object to the exemptions, I think there is every reason why the House should object to this kind of procedure. Because if we are going to spend hours and hours on Committee and Report stages of the Finance Bill, dealing with changes in Schedules and the Purchase Tax, it seems outrageous that,

on the very night we are doing that, we should then be asked to pass on exactly a parallel road to reach the same objective. There is nothing in the argument he put up in favour of making it by Order—that it was too late, or too difficult to define. It cannot be too difficult to define because he has defined it. It cannot be too late because, in point of fact, it came up before the Order Paper for the Report stage was circulated to hon. Members.
Therefore, I do invite the right hon. Gentleman to give this matter very grave consideration. Obviously, he cannot this time do anything, because we have just passed the Report stage of the Finance Bill, and we have no opportunity of making that Amendment there; but we do ask that next year, or whenever there is another Finance Bill, he will give a little more attention to the point of view of the House of Commons in a matter of this kind. There is only one conclusion some of us can come to in a matter of this kind—that possibly some other Department dealing with the matter omitted to tell the Chancellor of the Exchequer anything about it, so that he is the victim of lack of Departmental co-ordination.

11.5 p.m.

Viscount Hinchingbrooke: I should like to ask who was originally responsible for this Purchase Tax Order. I came into the House about half-an-hour ago to hear questions being asked about boats and nets, but it seems now that the Chancellor was playing a game. He offered a concession to the hon. Member for Tynemouth (Miss Colman), saying that he would put down a concession in an Order next year. But when my hon. Friend the Member for West Dorset (Mr. Digby) asked for a concession, the right hon. Gentleman said he could wait perhaps five years.

Mr. Dalton: I said nothing of the kind. I treated the hon. Member for West Dorset with complete courtesy, and I said nothing about waiting until next year. The noble Lord is characteristically inaccurate, and to me, it is only too evident that he has only recently come into the House.

Viscount Hinchingbrooke: I think the Chancellor was playing the fool with the House. Why do Socialist Members ask


for exemption from Purchase Tax at any stage which suits the Chancellor, when Conservative Members who ask for such exemptions have to wait and get no satisfaction from the Chancellor? Why do we get an Order for a Purchase Tax exemption of this kind? Why could it not be included in the ordinary law of the land? It seems utterly unreasonable and I protest most strongly against it. It is utterly wrong, and I think it reflects very badly on the Government.

Question put, and agreed to. Resolved:
That the Purchase Tax (Exemptions) (No. 1) Order, 1947 (S.R. &amp; O., 1947, No. 1255), dated 23rd June, 1947, made by the Treasury under the Finance (No. 2) Act, 1940, a copy of which Order was presented on 30th June, be approved.

Orders of the Day — SUNDAY CINEMATOGRAPH ENTERTAINMENTS

Resolved:
That the Order made by the Secretary of State for the Home Department. extending Section 1 of the Sunday Entertainments Act, 1932, to the Urban District of Chesham, a copy of which Order was presented on 14th July, be approved.
That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 2932, to the Urban District of Leatherhead, a copy of which order was presented on 14th July, be approved.
That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the Urban District of Letchworth, a copy of which Order was presented on 24th July, be approved.
That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the County Borough of Oldham, a copy of which Order was presented on 14th July, be approved.
That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the Urban District of Tring, a copy of which Order was presented on i4th July, be approved.
That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 2932, to the City of Wakefield, a copy of which Order was presented on 14th July, be approved.

—[Mr. Oliver.]

Orders of the Day — RIVER POLLUTION

Motion made, and Question proposed. "That this House do now adjourn."—(Mr. Popplewell.)

11.8 p.m.

Mr. Harold Davies: I want to take this opportunity to discuss what I regard as an entirely non-political question, but one of great importance to the health, welfare and well-being of this country at the moment. Hon. Members will recall that in another place in March they discussed this issue of river pollution in Britain. The pollution of British rivers has now reached such a stage that it has become a dominant thing in British life. We, as Britishers who love the countryside, should do something ultimately in this House to prevent the continual pollution of rivers in all parts of this island. Continually the consumption of drinking water and the need for clean water for our agriculture are increasing. Ultimately, and in only a few years from now, I hear that in London one will need from 45 to 60 gallons of water per head per day. Millions of pounds of money are spent on large and elaborate water schemes to bring water from the high land, but if rivers were not polluted, water could be drawn from them to serve our crowded towns. The water could be drawn from the rivers which pass through the towns. Nine-tenths of the water that falls on the surface of England is destroyed by river pollution.
There are three main causes of this pollution. The first is the discharge of untreated domestic sewage into streams and rivers. The second is the failure of industrial undertakings to render effluent harmless. The third is a combination of both of these. I believe that since the 1876 Act we have got a lot of power in law to deal with the problem. The position at the present moment so far as pollution is concerned was clearly laid down in the report made by the Joint Advisory Committee on River Pollution in 1937. That committee was appointed with the following terms of reference:
To consider and from time to time to report on the position with regard to the pollution of rivers and streams and on any legislative, administrative or other measures which appear to them to be desirable for reducing such pollution.
It was believed that the 1937 Public Health (Drainage of Trade Premises)


Act gave new powers for the reception of trade effluents. I do not believe that the Act has been implemented. Under the River Pollution Prevention Act, 1876, it is an offence to discharge into any stream (a) solid matter so as to interfere with the due flow of the stream or to cause pollution; (b) sewage; (c) poisonous, noxious or polluting liquid from a factory or manufacturing process or from a mine. There are now 1,605 authorities empowered to deal with river pollution. The 1937 report came to this conclusion:
It will be seen that there is no lack of administrative authority for enforcing the law. Nevertheless, it is admitted on all hands that many of our rivers are seriously polluted and that the law designed to prevent avoidable contamination is to a large extent not being put into operation.
It is not being put into operation. In the 1876 Act there is an escape clause, as proceedings against an industrial firm under that Act are limited because the local authority or authorities must be satisfied that the proceedings will not injure the industry. The cry was raised on the River Pollution Bill, "What is it to be—trade or trout?"
We must look at it from a much wider point of view today. I believe that more scientific research is needed into this issue of river pollution. I will just mention my own area in North Staffordshire with regard to the Trent catchment area and one or two of the rivers I know. It has been of some concern to all of us interested in the beauty of the countryside to see this. The Trent watershed covers 4,500 square miles. We have 725 miles of that river, yet there is this pollution. One third of river life, plant and fish, is entirely denuded and that denudation is increasing year by year and increased during the war. In the Potteries area itself every day 40 million tons of sewage and "slip"—a term we use for some of the white effluent that goes into the river from the Potteries—goes into this river which has a daily flow of 17 million gallons. In small communities I believe that water can deal effectively with waste products itself, but the problem increases as the population grows.
The River Trent, with the head waters, of Izaak Walton fame, in some of those areas in the northern part of my division and further over to the Stone district, was at one time one of the best trout streams in this country. It was

famous as a coarse-fishing river—now it is entirely a sewer. I have seen the map that the Trent Fishery Board published in their excellent pamphlet, showing the the extent of pollution now. I have no time this evening to go into that, but I believe that some of these streams like the Churnet, which starts outside my own town of Leek, is polluted by dye works, and the bed of the river is covered by sewage fungus. At Froghall and Oak-moor effluent from the copperplate works has destroyed all animal life, and for eleven miles beyond that there is no animal or fish life at all in the river. One famous small stream running from Stoke-on-Trent—it may not be euphemistically named; it is called Foulea Brook—is polluted from phenol and tar acids, and the stream is a deep red brown. But probably the worst is the Tame. The effluent from Birmingham Sewage Works is purer than the Tame into which it flows.
I was amazed to find in this excellent little booklet of the British Field Sports Society that in the Tame area 300 million gallons of entirely untreated sewage per day were going into the river. As the tide runs at two miles an hour this mass of filth cannot get away on a single tide, but moves up and down the estuary taking several tides to clear. Here is something we ought not to allow to remain in this beautiful land of ours. I do not wish to elaborate because there are one or two other hon. Members who I know want to speak.
We are engaged in this country on the creation of atomic energy plant. Are the Government fully aware of the possible effect of effluent into our modern rivers from atomic energy factories. I do not know the answer myself, but I do know what took place in Texas. This is an important issue, and I believe the countryside must have protection. I believe these factories should be taken much nearer to the sea.
Finally, as to the fisherman in my area. According to Lord Strabolgi there are 87,000 licences in the Trent district In the war years we had 73,000. Angling is not the sport only of the wealthy. In this age of speed, we want to give the opportunity to all classes who go to the peace of the countryside, to have clean rivers, and we want our fishermen—fishing for the sake of food as well as for


the sake of sport—to have the opportunity of fishing in clean rivers. It is the bounden duty of this House which has neglected this problem since 1876, to look into the pollution of British rivers and to see that really and truly, our rivers are worthy of the country in which we live.

11.21 p.m.

Mr. Mallalieu: The horrible story my hon. Friend the Member for Leek (Mr. Harold Davies) told about the rivers of the Potteries could be duplicated in the case of the rivers of every town in this country. I only want to add one example. The Fishery Board Report for the River Lune in 1945 said that from Liverpool and Barrow, and 150 miles around, into this river is discharged a minimum of 260,000 gallons of crude sewage every mile every 24 hours This, says the report, is the cesspool that thousands of people bathe in—including many from my own constituency—during the hot summer months. This is where shrimps and prawn live and feed. It is a common thing to find fish floating dead with their surface fins burned by acid or their eyes rotting out. It is a very common thing for these dead fish to be taken from the river and sold for human consumption. It is really no wonder that folk are getting poisoned.
The pollution of rivers in this country is a menace to health, a menace to food supplies, a menace to pleasure. I have been around the streams of the West Riding; I have seen where they start, walked on the moor where the water is clear. I have followed those streams down past mills where sewage and effluents from the factories poured in. I have seen the lovely fresh water of the streams transformed into sluggishly moving rivers, which go their way shamefacedly through the towns. These rivers ought to be the centre around which the life of the town hinges. We have powers to deal with this abuse of the natural amenities of our country. The Ministry of Health has the power; the Ministry of Agriculture has the power. I beg and pray them to make use of it in time.

11.24 p.m.

Lieut.-Colonel Corbett: I endorse every word spoken from the other side. This is a frightfully important question, one worthy of a full day's Debate, and I hope the Government will

make it possible for us to have one. I am from the West Country, where some of our rivers are still not polluted. But the Wye, which is famous for its fishing, is polluted from the sewage of Hereford. Not only should we consider saving rivers partially polluted; we should also resuscitate some of the rivers which are now blackened streams but which can be saved by turning away factory effluents into one stream instead of two or three. Many lovely streams in South Wales have been polluted. A little hard work would make them safe and would enable miners to enjoy their Sunday fishing. I hope the Government will give us an opportunity of discussing this matter further and will take action to try to save the rivers of England.

11.25 p.m.

Mr. Digby: I would like briefly to support the plea that my hon. and gallant Friend has made. The rate at which we are destroying the fresh water fish of this country at the present moment is alarming. It means that a valuable source of food is being neglected. This problem has many aspects in addition to this aspect of the pleasure denied to the many keen fishermen throughout this country. Only a few days ago, I was reading a report prepared for a local authority on sewage disposal—a very small local authority—and owing to the fact that their plant had been designed some 40 years before, it was necessary to discharge very large quantities of untreated sewage into a river. This is happening all over the country, and it is essential that steps should be taken at an early date to do something about it. I know there are difficulties, and that, for example, it takes time to set up the new plant, especially at a moment when there are shortages of labour and materials. But sooner or later the Ministry of Health must get down to this matter. As my hon. and gallant Friend has said, we must stop this rot for it is growing worse. I had recently an example in Warwickshire. In addition to that it is essential to try to re-claim some of these rivers to which so much damage has already been done.

11.26 p.m.

The Parliamentary Secretary to the Ministry of Health (Mr. John Edwards): The hon. Member for Leek (Mr. Harold Davies) has drawn the attention of the House to a problem of the greatest social


significance, and those who followed him have given examples, which may be multiplied, of the dreadful state of many of our rivers. We know the danger to water supplies and the destruction of fisheries, and I do not want to attempt to tone down anything anyone has said about the state of the rivers. I would assure the House that the Government share to the full, the concern that has been expressed tonight, that there should be widespread improvement in the present condition of the rivers of England and Wales as soon as possible. There was a time when the problem of the angler was a purely technical problem of how to catch the fish. It now, all too often, occurs that the angler has to find a place where there are fish.
Times have changed since Isaak Walton wrote of "Trent, so-called from the thirty kinds of fishes found in it." The problem is not, however, a new one. It is one of the prices that we have to pay for our industrialisation. The first world war saw a great deterioration in the state of our rivers, and the recent world war showed a further deterioration, though not, I am glad to say, to anything like the same scale as in the first war. But it was bad enough in all conscience and occurred in circumstances that one could not very well control. We had the additional burden of sewage disposal works at a time when it was quite impossible to provide labour or materials for the necessary expansions or improvements. It would be difficult to say that anyone is to blame, but it has made matters worse. I would agree with what I thought to be the submission of my hon. Friend the Member for Leek. The overriding difficulty at the moment does not lie in the lack of powers. Doubtless there are ways in which the powers could be improved, but I think he was right in drawing attention to the fact that the real trouble is that we have not got a system of authoriy which makes possible the effective use of the powers that are in existence.
I am quite certain that, without any change in powers, it would be possible, if these powers were properly used, to effect a very great improvement in the state of rivers. It is the authorities which are wrong. There is, to use the well-worn words of Lord Goschen, "a chaos as regards authorities"—borough councils, urban district councils, rural district

councils, county councils with over-lapping functions, and fishery boards where they exist. Therefore, as I imagine is common knowledge, the Government stand by the recommendations of the Milne Committee to the effect that we do need a single authority, an all-purpose authority, covering a river in all its aspects, sufficiently big, sufficiently strong, to be able to use the powers which exist at the present time. It is interesting to note in passing that where there is a body of this kind, as for example, the Thames Conservancy Board, we see very considerable improvement. I may also refer to the West Riding Rivers' Board in which I imagine my hon. Friend, the hon. Member for Huddersfield (Mr. Mallalieu) would be particularly interested. The West Riding rivers have, at what has been a trifling cost spread over the whole of the West Riding, improved the state of the rivers very considerably. I am satisfied that the really important thing to appreciate is that we must have a single authority in charge of a river and then, I believe, we may succeed in having some progress.
We have, of course, to consider improvement of sewerage schemes. Every new sewerage scheme improves the condition of a river. Often the effluent from a modern sewerage plant is purer than the streams into which it is flowing. We must regard as most important the improvement of our existing systems of sewage disposal, particularly in industrial areas where trade wastes have to be dealt with. The war was responsible for some deterioration, but there are many large schemes now in an advanced stage of planning, together with a number of smaller schemes which we are actually putting through at the present time. I believe that when labour and materials are available, these schemes will improve the position, perhaps particularly in the urban districts, but also in rural districts as well. However, these schemes will take time and at the present, with the urgent need for electricity stations and gas plants, for fuel and power needs of one kind or another and the transport connected with them, and for housing, what we can in fact expend in terms of labour and material on work of this kind is limited.
I want to say a word or two about the industrial aspects of this matter. There are, throughout the country, a number of public-spirited industrialists who


recognise their responsibility to endeavour to neutralise industrial waste, and who are ready to work with research organisations in this field, and I give credit to them. But it is unfortunately true that there are all too many industrialists which appear to be completely irresponsible, which are indifferent and unwilling to co-operate and often seek refuge in some old privilege, sometimes one which keeps them within the law, rather than face their clear social responsibility to deal with waste products of their particular trade.
I would say, in conclusion, that there really is no short-term remedy. The

neglect of a century cannot be overcome quickly. But we do view this matter with the greatest concern. We are spending a good deal of time, and I myself am spending a good deal of time, planning and preparing for the time when we have, on the one hand, the materials and labour necessary for this job and, on the other hand, authorities large enough and powerful enough to enforce the law without fear or favour.

Adjourned accordingly at Twenty-five minutes to Twelve o'clock.